FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended June 30, 2001
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 1-44
ARCHER-DANIELS-MIDLAND COMPANY
(Exact name of registrant as specified in its charter)
Delaware 41-0129150
(State or other jurisdiction of (I. R. S. Employer
incorporation or organization) Identification No.)
4666 Faries Parkway Box 1470 Decatur, Illinois 62525
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 217-424-5200
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange on
Title of each class which registered
Common Stock, no par value New York Stock Exchange
Chicago Stock Exchange
Swiss Exchange
Frankfurt Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No____
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [ ]
State the aggregate market value of the voting stock held by non-affiliates of the registrant.
Common Stock, no par value--$7.7 billion
(Based on the closing sale price of Common Stock as reported on the New York Stock Exchange on September 7, 2001)
Indicate the number of shares outstanding of each of the registrant's classes of common stock, as of the latest practicable date.
Common Stock, no par value-631,272,693 shares
(September 7, 2001)
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the annual shareholders' report for the year ended June 30, 2001 are incorporated by reference into Parts I, II and IV.
Portions of the annual proxy statement for the annual meeting of stockholders to be held November 1, 2001 are incorporated by reference into Part III.
PART I
Item 1. BUSINESS
(a) General Description of Business
Archer Daniels Midland Company was incorporated in Delaware in 1923, successor to the Daniels Linseed Co. founded in 1902.
During the last five years, the Company has experienced significant growth, spending approximately $4 billion for construction of new plants, expansions of existing plants and the acquisitions of plants and transportation equipment. There have been no significant dispositions during this period.
(b) Financial Information About Industry Segments
The Company is principally engaged in the procuring, transporting, storing, processing and merchandising of agricultural commodities and products.
The Company's operations are classified into two reportable business segments: Oilseeds & Corn Processing and Agricultural Services. Each of these segments is organized based upon similar economic characteristics and is similar in the nature of products and services offered, the nature of production processes, the type or class of customer and distribution methods. The Company's remaining operations are classified as Other.
(c) Narrative Description of Business
(i) Principal products produced and principal markets for and methods of distribution of such products:
Oilseeds & Corn Processing
The Company is engaged in processing oilseeds such as soybeans, cottonseed, sunflower seeds, canola, peanuts, flaxseed and corn germ into vegetable oils and meals principally for the food and feed industries. Crude vegetable oil is sold "as is" or is further processed by refining and hydrogenating into margarine, shortening, salad oils and other food products. Partially refined oil is sold for use in chemicals, paints and other industrial products. Oilseed meals supply more than one-half of the high protein ingredients used in the manufacture of commercial livestock and poultry feeds. Cottonseed flour is produced and sold primarily to the pharmaceutical industry. Cotton cellulose pulp is manufactured and sold to the chemical, paper and filter markets.
The Company is engaged in dry milling and wet milling corn operations. Products produced for use by the food and beverage industry include syrup, starch, glucose, dextrose, crystalline dextrose, high fructose sweeteners, crystalline fructose and grits. Corn gluten feed and distillers grains are produced for use as feed ingredients. Ethyl alcohol is produced to beverage grade or for industrial use as ethanol. In gasoline, ethanol increases octane and is used as an extender and oxygenate. Corn germ, a by-product of the milling process, is further processed as an oilseed.
The Company owns a 30% non-voting equity interest in Minnesota Corn Processors (MCP). MCP operates wet corn milling plants in Minnesota and Nebraska.
Item 1. BUSINESS-Continued
The Company owns a 28% interest in Pura PLC, a U.K. based company, that processes and markets edible oil.
Eaststarch C.V. (Netherlands), of which the Company has a 50% interest, owns interests in companies that operate wet corn milling plants in Bulgaria, Hungary, Romania, Slovakia and Turkey.
Almidones Mexicanos S.A., of which the Company has a 50% interest, operates a wet corn milling plant in Mexico.
Golden Peanut Company, a joint venture among the Company, Cargill, Inc. and Alimenta Processing Corporation, is a major supplier of peanuts to both the domestic and export markets. The Company has a 33% ownership interest in this joint venture.
The Company participates in various joint ventures that operate oilseed crushing facilities, oil refineries and related storage facilities in China and Indonesia.
Agricultural Services
The Agricultural Services Segment utilizes the Company's vast grain elevator and transportation network to buy, store, clean and transport agricultural commodities, such as oilseeds, corn, wheat, milo, oats and barley, and resells these commodities primarily as food or feed ingredients.
Alfred C. Toepfer International and affiliates, in which the Company has a 75% interest (25% held indirectly), is one of the world's largest, most respected trading companies specializing in agricultural commodities and processed products. Toepfer has thirty-eight sales offices worldwide.
The Company owns approximately 42% of United Grain Growers of Canada (UGG). UGG, with 140 facilities located throughout Western Canada, is involved in grain merchandising, crop input marketing and distribution, livestock production services and farm business communications.
The Company has a 45% interest in Kalama Export Company, a grain export elevator in Washington.
Other
The Company produces value-added soy protein products by further processing soybean meal into soy flour and grits which are used in both food and industrial products. Textured vegetable protein (TVP®), a soy protein product developed by the Company, is sold primarily to the institutional food market and, through others, to the food consumer market. The Company also produces a wide range of other edible soy protein products including isolated soy protein, soy protein concentrate, soy-based milk products, soy flours and soy protein meat substitutes (Harvest Burgers® and Harvest Burgers® for Recipes™). The Company produces and markets a wide range of consumer and institutional health foods based on the Company's various soy protein products, including soy-derived isoflavones. Lecithin, an emulsifier produced in the vegetable oil refining process, is marketed as a food and feed ingredient. Natural source Vitamin E, an antioxidant, and distilled monoglycerides, an emulsifier, are produced from soybeans and other oilseeds.
Item 1. BUSINESS-Continued
By fermentation of dextrose, the Company produces citric and lactic acids, feed-grade amino acids and vitamins, lactates, sorbitol, xanthan gum, and food emulsifiers principally for the food and feed industries.
Wheat flour is sold primarily to large bakeries, durum flour is sold to pasta manufacturers and bulgur, a gelatinized wheat food, is sold to both the export and the domestic food markets. The Company produces wheat starch and vital wheat gluten for the baking industry. The Company also mills milo to produce industrial flour used in the manufacturing of wall board for the building industry.
The Company grinds cocoa beans and produces cocoa liquor, cocoa butter, cocoa powder, chocolate and various compounds for the food processing industry.
The Company produces and distributes formula feeds and animal health and nutrition products to the livestock, dairy and poultry industries. Many of the feed ingredients and health and nutrition products are produced in the Company's other commodity processing operations.
The Company produces bakery products and mixes which are sold to the baking industry.
The Company produces lettuce, other fresh vegetables and herbs in its hydroponic greenhouse.
The Company processes and distributes edible beans for use in many parts of the food industry.
The Company raises fish in an aquaculture operation for distribution to consumer food customers.
Hickory Point Bank and Trust Co., a wholly owned subsidiary of the Company, furnishes public banking and trust services, as well as cash management and securities safekeeping services for the Company.
ADM Investor Services, Inc., a wholly owned subsidiary of the Company, is a registered futures commission merchant and a clearing member of all principal commodities exchanges. ADM Investor Services International, Ltd. specializes in futures, options and foreign exchange in the European marketplace.
Agrinational Insurance Company, a wholly owned subsidiary of the Company, acts as a direct insurer and reinsurer of a portion of the Company's domestic and foreign property and casualty insurance risks.
The Company owns a 62% interest in Heartland Rail Corporation. Heartland's 80% owned affiliate, Iowa Interstate Railroad, operates a regional railroad in Iowa and Illinois.
Gruma S.A. de C.V. and affiliates, of which the Company has a 29% interest, is the world's largest producer and marketer of corn flour and tortillas with operations in the U.S., Mexico, Central America and South America. Additionally, the Company has a 20% interest in a joint venture which consists of the combined U.S. corn flour operations of ADM and Gruma. The Company also has a 40% share, through a joint venture with Gruma, in nine Mexican-based wheat flour mills.
Item 1. BUSINESS-Continued
ADM-Riceland Partnership, a joint venture between the Company and Riceland Foods, Inc., is a processor of rice and rice products for institutional and consumer food customers. The Company has a 50% ownership interest in this joint venture.
International Malting Company, a joint venture between the Company and the LeSaffre Company, operates barley malting plants in the United States, Australia, Canada and France. The Company has a 49% ownership interest in this joint venture.
The Company is a limited partner in various private equity funds which invest primarily in emerging markets that have agri-processing potential.
Methods of Distribution
Since the Company's customers are principally other manufacturers and processors, its products are distributed mainly in bulk from processing plants or storage facilities directly to the customers' facilities. The Company has developed a comprehensive transportation system utilizing trucks, rail, river barges and ocean-going vessels to efficiently move both commodities and processed products virtually anywhere in the world. The Company owns or leases large numbers of the trucks, trailers, railroad tank and hopper cars, river barges and towboats used in this transportation system.
(ii) Status of new products
The Company continues to expand its business through the development and production of new, value-added products. These new products include a wide-range of health and nutrition products known as nutraceuticals or functional foods. The Company acquired an exclusive license for flax lignan technology that may have potential for health maintenance and possible risk reduction of several diseases. The license gives the Company an exclusive, worldwide right to produce and sell flax lignans for use as an active ingredient in functional foods, nutraceuticals, pharmaceuticals, animal feed additives and veterinary products. The Company is a leader in the processing of flaxseed.
The Company continues to develop its Cardio-Aid® phytosterol technology. In addition, the Company has acquired additional phytosterol technology under a licensing agreement. Phytosterols are natural plant extracts which are used in margarines and salad dressings. Studies have shown that phytosterols reduce cholesterol levels in the bloodstream.
Working with the National Corn Growers Association and Battelle, a research and development company, using an Office of Industrial Technology grant, the Company is developing a process for fractioning corn fiber into value added components such as cellulose, hemicellulose, protein, starch, fatty acids and sterols. These components may provide new, less expensive feedstocks for value-added products such as ethanol and citric acid. The sterol component will provide new volumes to meet increased demand for sterols.
The Company has formed a joint venture with Kao Corporation of Japan to manufacture and market diacylglycerol oil in America, Europe, Australia and New Zealand. This oil, developed by Kao, has been shown in several clinical studies in Japan to assist substantially in lowering body fat content. This naturally derived vegetable oil can be used as a home cooking oil or as an ingredient in packaged foods.
Item 1. BUSINESS-Continued
The Company is researching new industrial uses for vegetable oils. Using technology developed at the University of Missouri at Rolla, a new reactive coalescing agent has been developed for latex paints. This agent will replace current volatile solvents used in paint formulation, thereby eliminating the volatile organic compounds in these products while improving the properties of the paint. Along these same lines, new uses are being developed for the conjugated linseed oil technology developed at the Company for use in the forest products and ink industry. The Company is also developing mono-ene fatty acid vegetable oils for use as high stability vegetable based lubricants.
The Company is completing vitamin C production facilities. The Company continues to develop its soy protein meat substitutes, Harvest Burgers® and Harvest Burgers® for Recipes™, its soy protein powdered non-dairy beverage, Nutribev®, and its non-dairy frozen dessert, Dairylike™. In the nutraceutical area, work continues on expanding the use of isoflavones into more food formulations.
(iii) Source and availability of raw materials
Substantially all of the Company's raw materials are agricultural commodities. In any single year, the availability and price of these commodities are driven by unpredictable factors such as weather, plantings, government (domestic and foreign) farm programs and policies, changes in global demand created by population growth and higher standards of living and global production of similar and competitive crops.
(iv) Patents, trademarks and licenses
The Company owns several valuable patents, trademarks and licenses, but does not consider any segment of its business dependent upon any single or group of patents, trademarks or licenses.
(v) Extent to which business is seasonal
Since the Company is so widely diversified in global agribusiness markets, there are no material seasonal fluctuations in the manufacture, sale and distribution of its products and services. There is a degree of seasonality in the growing season and procurement of the Company's principal raw materials: oilseeds, cocoa beans, wheat, corn and other grains. However, the actual physical movement of the millions of bushels of these crops through the Company's storage and processing facilities is reasonably constant throughout the year.
(vi) Working capital items
Price variations and availability of raw agricultural commodities at harvest often cause fluctuations in the Company's inventories and short-term borrowings.
Item 1. BUSINESS-Continued
(vii) Dependence on single customer
No material part of the Company's business in any segment is dependent upon a single customer or very few customers.
(viii) Amount of backlog
Because of the nature of the Company's business, the backlog of orders at year end is not a significant indication of the Company's activity for the current or upcoming year.
(ix) Business subject to renegotiation
The Company has no business with the government subject to renegotiation.
(x) Competitive conditions
Markets for the Company's products are highly price competitive and sensitive to product substitution. No single company competes with the Company in all of its markets. However, a number of large companies compete with the Company in one or more markets. Major competitors in one or more markets include, but are not limited to, Cargill, Inc., ConAgra, Inc., Corn Products International, Inc., Bunge, Ltd., Barry Callebaut A.G. and Tate & Lyle PLC.
(xi) Research and development expenditures
Practically all of the Company's technical efforts and expenditures are concerned with food and feed ingredient products. Special efforts are being made to find improvements in food technology to alleviate protein malnutrition throughout the world, utilizing the three largest United States crops: corn, soybeans and wheat.
The need to successfully market new or improved food and feed ingredients developed in the Company's research laboratories led to the concept of technical support. The Company is staffed with technical representatives who work closely with customers and potential customers on the development of food and feed products which incorporate Company-produced ingredients. These technical representatives are an adjunct to both the research and sales functions.
The Company maintains a research laboratory in Decatur, Illinois where product and process development activities are conducted. To develop new bioproducts and to improve existing bioproducts, new cultures are developed using classical mutation and genetic engineering. Protein research is conducted at facilities in Decatur where meat and dairy pilot plants support application research. Starch and amyolitic enzyme research is done at a laboratory in Clinton, Iowa. Research to support sales and development for bakery products is done at a laboratory in Olathe, Kansas. Research to support sales and development for cocoa and chocolate products is done in Milwaukee, Wisconsin and the Netherlands. The Company maintains research centers in Quincy, Illinois that conduct swine and cattle feeding trials to test new formula feed products and to develop improved feeding efficiencies.
The amounts spent during the three years ended June 30, 2001, 2000 and 1999 for such technical efforts were approximately $23.8, $23.4 and $22.0 million, respectively.
Item 1. BUSINESS-Continued
(xii) Material effects of capital expenditures for environmental protection
During 2001, $16 million was spent for equipment, facilities and programs for pollution control and compliance with the requirements of various environmental agencies.
There have been no material effects upon the earnings and competitive position of the Company resulting from compliance with federal, state and local laws or regulations enacted or adopted relating to the protection of the environment.
The Company expects expenditures for environmental facilities and programs will continue at approximately the present rate with no unusual amounts anticipated for the next two years.
(xiii) Number of employees
The number of persons employed by the Company was 22,834 at June 30, 2001.
(d) Financial Information About Foreign and Domestic Operations and Export Sales
The Company's foreign operations are principally in developed countries and do not entail any undue or unusual business risks. Geographic financial information is set forth in "Note 11 of Notes to Consolidated Financial Statements" of the annual shareholders' report for the year ended June 30, 2001 and is incorporated herein by reference.
Export sales by segment for the last three years were as follows:
|
2001 |
|
2000 |
|
1999 |
||
|
(in thousands) |
||||||
Oilseeds & Corn Processing |
$1,380,962 |
$1,323,030 |
$1,694,082 |
|||
Agricultural Services |
3,250,944 |
3,120,425 |
2,333,697 |
|||
Other |
264,645 |
255,278 |
263,399 |
|||
Total |
$4,896,551 |
$4,698,733 |
$4,291,178 |
|||
Item 1. BUSINESS-Continued
(e) Executive Officers and Certain Significant Employees
|
Name |
Title |
Age |
|
|
G. Allen Andreas |
Chairman of the Board of Directors from January 1999. Chief Executive from July 1997. President from July 1997 to February 1999. Counsel to the Executive Committee from September 1994 to July 1997. Vice President from 1988 to July 1997. |
58 |
|
|
Martin L. Andreas |
Senior Vice President from 1989. Assistant to the Chief Executive from 1989. |
62 |
|
|
Charles P. Archer |
Treasurer from October 1992. |
45 |
|
|
Maureen K. Ausura |
Vice President from June 2000. Senior Vice President, Human Resources, of Giant Eagle, Inc. from 1996 to June 2000. Various senior personnel positions with Campbell Soup Company from 1984 to 1996. |
45 |
|
|
Ronald S. Bandler |
Assistant Treasurer from January 1998. Manager of Treasury Operations from 1989 to January 1998. |
40 |
|
|
Lewis W. Batchelder |
Group Vice President from July 1997. President of Grain Operations from March 2001. Various grain merchandising positions since 1971. |
56 |
|
|
William H. Camp |
Group Vice President and President, North American Oilseed Processing Division from April 2000. Group Vice President and President, South American Oilseed Processing Division from March 1999 to April 2000. Vice President from April 1993 to March 1999. |
52 |
|
|
Mark J. Cheviron |
Vice President from July 1997. Vice President of Corporate Security and Administrative Services since May 1997. Director of Security since 1980. |
52 |
Item 1. BUSINESS-Continued
|
Larry H. Cunningham |
Senior Vice President from February 2000. Consultant for the Company from October 1999 to February 2000. Group Vice President and President of ADM Corn Processing Division from October 1996 to October 1999. President of ADM Food Additives Division from October 1998 to October 1999. Vice President from July 1993 to October 1996. |
57 |
|
|
Anthony P. Delio |
Vice President from May 2000. President of ADM Protein Specialties Division from October 1999. President of ADM Nutraceutical Division from May 1999. Various senior product development positions with Mars, Inc from 1980 to May 1999. |
45 |
|
|
Craig A. Fischer |
Vice President from September 2001. President of ADM Milling from September 2001. President of ADM BioProducts and Specialty Ingredients from July 2000 to September 2001. Vice President of ADM Corn Processing from 1985 to 2000. President of ARTCO from 1996 to 1999. |
51 |
|
|
Dennis C. Garceau |
Vice President from April 1999. President of ADM Technical Services Department from April 1999. Various senior engineering positions from 1969. |
54 |
|
|
Edward J. Harjehausen |
Vice President from October 1992. President of ADM Corn Processing Division from July 2000. President of ADM BioProducts and Food Additives from October 1999 to July 2000. |
51 |
|
|
Craig E. Huss |
Vice President from January 2001. President of ADM Transportation from 1999. Various grain elevator and merchandising management positions from 1976 to 1999. |
48 |
|
|
Paul L. Krug, Jr. |
Vice President from November 1991. President of ADM Investor Services from 1991. |
57 |
|
|
Michael Lusk |
Vice President from November 1999. Senior Vice President with International Risk Management, Inc. from 1989. |
52 |
Item 1. BUSINESS-Continued
|
Claudia M. Madding |
Executive Assistant to the Chairman and Chairman Emeritus from January 1999. Secretary to the Executive Committee from September 1997. Executive Assistant to the Chairman from July 1997 to January 1999. Assistant Secretary from 1993. Administrative Assistant to the Chairman from 1984 to 1997. |
50 |
|
|
|
John D. McNamara |
President from February 1999. Group Vice President and President of North American Oilseed Processing Division from July 1997 to February 1999. President of ADM Agri-Industries since 1992. |
53 |
|
Steven R. Mills |
Vice President from February 2000. Controller from October 1994. |
46 |
|
|
Paul B. Mulhollem |
Senior Vice President from October 1999. Group Vice President from July 1997 to October 1999. Vice President from January 1996 to July 1997. Managing Director of ADM International, Ltd., from 1993 to October 1999. |
52 |
|
|
Brian F. Peterson |
Group Vice President and Managing Director of ADM International, Ltd., from October 1999. Vice President from January 1996 to October 1999. President of ADM Protein Specialties Division from February 1999 to October 1999. President of ADM BioProducts Division from 1995 to October 1999. |
59 |
|
|
Raymond V. Preiksaitis |
Group Vice President from July 1997. Vice President - Management Information Systems from 1988 to July 1997. |
49 |
|
|
John G. Reed |
Vice President from 1982. |
71 |
|
|
Richard P. Reising |
Senior Vice President from July 1997. Vice President, Secretary and General Counsel from 1991 to July 1997. |
57 |
Item 1. BUSINESS-Continued
|
John D. Rice |
Senior Vice President from February 2000. Group Vice President and President, North American Oilseed Processing Division from February 1999 to February 2000. Vice President from 1993 to February 1999. President of ADM Food Oils Division from December 1996 to February 2000. |
47 |
|
Scott A. Roberts |
Assistant Secretary and Assistant General Counsel from July 1997. Member of the Law Department since 1985. |
41 |
|
|
Kenneth A. Robinson |
Vice President from January 1996. Vice President of ADM Processing Division from 1985. |
54 |
|
|
Scott A. Roney |
Vice President, Corporate Compliance and Regulatory Affairs from April 2001. Member of the Law Department from 1991 to April 2001. |
36 |
|
|
Douglas J. Schmalz |
Vice President and Chief Financial Officer from 1986. |
55 |
|
|
David J. Smith |
Vice President, Secretary and General Counsel from July 1997. Assistant General Counsel from 1995 to July 1997. Assistant Secretary from 1988 to July 1997. Member of the Law Department since 1981. |
46 |
|
|
Stephen H. Yu |
Vice President from January 1996. Managing Director of ADM Asia-Pacific, Ltd., from 1993. |
41 |
|
|
Officers of the registrant are elected by the Board of Directors for terms of one year and until their successors are duly elected and qualified. |
|||
Item 2. PROPERTIES
PROCESSING FACILITIES
The Company owns, leases, or has a 50% or greater interest in the following processing plants:
|
United States |
Foreign |
Total |
|
|
Owned |
157 |
100 |
257 |
|
Leased |
2 |
2 |
4 |
|
Joint Venture |
5 |
9 |
14 |
|
164 |
111 |
275 |
The Company's operations are such that most products are efficiently processed near the source of raw materials. Consequently, the Company has many plants strategically located in grain producing areas. The annual volume of commodities processed will vary depending upon availability of raw materials and demand for finished products.
Oilseeds & Corn Processing
The Company operates twenty-eight domestic and eighteen foreign oilseed crushing plants with a daily processing capacity of approximately 86,000 metric tons (3.2 million bushels). The domestic plants are located in Alabama, Arkansas, Georgia, Illinois, Indiana, Iowa, Kansas, Minnesota, Missouri, Mississippi, Nebraska, North Dakota, Ohio, South Carolina, Tennessee and Texas. The foreign plants are located in Bolivia, Brazil, Canada, England, Germany, India, Mexico, the Netherlands, Poland and Turkey.
The Company operates thirteen domestic oilseed refineries in Georgia, Illinois, Indiana, Iowa, Minnesota, Missouri, Nebraska, North Dakota, Tennessee and Texas as well as fifteen foreign refineries in Bolivia, Brazil, Canada, Germany, India, the Netherlands, Poland and Turkey. The Company also has an interest, through a joint venture, in an oilseed refinery in England. The Company produces packaged oils in California, Georgia, Illinois, Bolivia, Brazil, Germany and Turkey and has an interest, through a joint venture, in a packaged oils plant in England. Cotton linter pulp is produced in Tennessee and cottonseed flour is produced in Texas.
The Company operates four wet corn milling and two dry corn milling plants with a daily grind capacity of approximately 41,700 metric tons (1.6 million bushels). These plants and other related properties, including corn germ extraction and corn gluten pellet plants, are located in Illinois, Iowa, New York and North Dakota. The Company also has interests, through joint ventures, in corn milling plants in Bulgaria, Hungary, Mexico, Romania, Slovakia and Turkey.
Other
The Company operates twenty-six domestic wheat and durum flour mills, a domestic bulgur plant, three domestic corn flour mills, two domestic milo mills, and eighteen foreign flour mills with a total daily milling capacity of approximately 31,200 metric tons (1.1 million bushels). The Company also operates seven bakery mix and specialty ingredient plants and two starch and gluten plants. These plants and related properties are located in California, Illinois, Indiana, Iowa, Kansas, Louisiana, Minnesota, Missouri, Nebraska, New York, North Carolina, Oklahoma, Pennsylvania, Tennessee, Texas, Washington, Wisconsin, Barbados, Belize, Canada, England, Grenada, Jamaica, and the Netherlands Antilles. The Company also has an interest, through a joint venture, in rice milling plants in Arkansas and Louisiana.
Item 2. PROPERTIES-Continued
The Company operates four domestic and ten foreign chocolate and cocoa bean processing plants. The domestic plants are located in Georgia, Massachusetts, New Jersey, and Wisconsin, and the foreign plants are located in Brazil, Canada, China, England, Ivory Coast, the Netherlands, Poland and Singapore.
Soy protein specialty products are produced in Illinois and the Netherlands, lecithin products are produced in Illinois, Iowa, Nebraska, Canada, Germany and the Netherlands, and Vitamin E is produced in Illinois. The Company produces feed and food additives at eight plants located in Illinois, North Carolina, China and Ireland. The Company also operates forty-two domestic and thirteen foreign formula feed and animal health and nutrition plants. The domestic plants are located in Georgia, Illinois, Indiana, Iowa, Kansas, Kentucky, Michigan, Minnesota, Missouri, Nebraska, Ohio, Pennsylvania, Texas, Washington and Wisconsin. The foreign plants are located in Barbados, Belize, Canada, China, Grenada, Ireland, the Netherlands Antilles, and Puerto Rico. The Company also has an interest, through a joint venture, in a formula feed plant in China.
The Company operates various other food and food ingredient plants in North Dakota, England, France, Germany and Jamaica.
PROCUREMENT FACILITIES
The Company owns, leases, or has a 50% or greater interest in the following procurement facilities:
|
United States |
Foreign |
Total |
|
|
Owned |
228 |
94 |
322 |
|
Leased |
52 |
28 |
80 |
|
Joint Venture |
5 |
2 |
7 |
|
285 |
124 |
409 |
Oilseeds & Corn Processing
The Oilseeds & Corn Processing Segment operates eighteen domestic country grain elevators as adjuncts to its processing plants. These elevators, with an aggregate storage capacity of 8 million bushels are located in Arkansas, Georgia, Illinois, Kansas, Missouri and North Carolina.
This segment also operates one hundred fifteen foreign elevators including port facilities in Argentina, Brazil, Canada, Germany, Paraguay and Uruguay as adjuncts to its processing plants. These facilities have a storage capacity of 107 million bushels.
Agricultural Services
The Agricultural Services Segment operates two hundred nineteen domestic terminal, country, and river elevators covering the major grain producing states, including one hundred thirty country elevators and eighty-nine terminal and river loading facilities including six grain export elevators in Louisiana, Maryland, and Texas. Elevators are located in Colorado, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maryland, Michigan, Minnesota, Missouri, Montana, Nebraska, North Dakota, Ohio, Oklahoma, Tennessee, Texas and Utah. These elevators have an aggregate storage capacity of approximately 504 million bushels.
The Company also has interests, through joint ventures, in five domestic grain elevators located in Minnesota and South Dakota. Domestic joint venture grain terminals and elevators have an aggregate storage capacity of approximately 5 million bushels.
Item 2. PROPERTIES-Continued
Other
The Company operates forty-three domestic and four foreign edible bean procurement facilities with an aggregate storage capacity of approximately 22 million bushels, located in California, Colorado, Idaho, Michigan, Minnesota, North Dakota, Wyoming and Canada.
The Company operates three cocoa bean handling facilities/port sites in the Ivory Coast.
Item 3. LEGAL PROCEEDINGS
ENVIRONMENTAL MATTERS
In 1993, the State of Illinois Environmental Protection Agency ("Illinois EPA") brought administrative enforcement proceedings arising out of the Company's alleged failure to obtain proper permits for certain pollution control equipment at one of the Company's processing facilities in Illinois. In 1998, the Illinois EPA filed an administrative enforcement proceeding arising out of certain alleged permit exceedances relating to the same facility. Also, in 1998 the Company voluntarily reported to the Illinois EPA certain other permit exceedances related to other processes at that same facility, and in 1999 Illinois EPA issued a Notice of Violation relating to those exceedances. In 2000, the Company voluntarily disclosed certain other permit exceedances at the same facility. In 1998, the State of Illinois filed a civil administrative action against the Company alleging violations of the Illinois Environmental Protection Act, and regulations promulgated thereunder, arising from a one time release of denatured ethanol at one of the Company's Illinois distribution facilities. The Company is in discussions with the Illinois EPA to settle all of the pending matters with the State. In January 2000, the United States Environmental Protection Agency ("U.S. EPA") issued a Notice of Violation to the Company for another Illinois facility regarding alleged emissions violations and the failure to obtain proper permits for various equipment at that facility. That matter has been referred to the Department of Justice ("DOJ"), and the Company has met with the U.S. EPA and DOJ regarding settlement of that matter. In management's opinion, the settlements and the remaining proceedings, all seeking compliance with applicable environmental permits and regulations, will not, either individually or in the aggregate, have a material adverse affect on the Company's financial condition or results of operations.
On July 31, 2000, the federal environmental authorities in Brazil ("IBAMA") issued an administrative notice to the Company requiring payment of approximately $5.6 million for discharge of industrial wastewater from its facility located in Rondonopolis. The Company appealed that penalty, and the penalty was reduced to approximately $400,000. The Company is unwilling to accept a penalty that large and has pursued a further appeal. Also, in December 2000, IBAMA notified the Company that it had not fulfilled certain agreements its predecessor had entered into regarding tree farming required to allow the harvesting of wood for fuel use. A penalty of approximately $750,000 was proposed based on the wood growth shortfall. The Company submitted evidence that the growth shortfall was approximately one-third of that estimated by the government and IBAMA has generally accepted that figure. The Company is currently considering its settlement options and researching its predecessor's liability for this matter. In management's opinion, these proceedings will not, either individually or in the aggregate, have a material adverse affect on the Company's financial condition or results of operations.
The Company is involved in approximately 25 administrative and judicial proceedings in which it has been identified as a potentially responsible party ("PRP") under the federal Superfund law and its state analogs for the study and clean up of sites contaminated by material discharged into the environment. In all of these matters, there are numerous PRPs. Due to various factors such as the required level of remediation and participation in the clean-up effort by others, the Company's future clean-up costs at these sites cannot be reasonably estimated. In management's opinion, these proceedings will not, either individually or in the aggregate, have a material adverse affect on the Company's financial condition or results of operations.
The Company is currently a defendant in various lawsuits related to alleged anticompetitive practices by the Company as described in more detail below. The Company intends to vigorously defend the actions unless they can be settled on terms deemed acceptable to the parties.
Item 3. LEGAL PROCEEDINGS-Continued
GOVERNMENTAL INVESTIGATIONS
Federal grand juries in the Northern Districts of Illinois, California and Georgia, under the direction of the DOJ, have been investigating possible violations by the Company and others with respect to the sale of lysine, citric acid and high fructose corn syrup, respectively. In connection with an agreement with the DOJ in fiscal 1997, the Company paid the United States fines of $100 million. This agreement constitutes a global resolution of all matters between the DOJ and the Company and brought to a close all DOJ investigations of the Company. The federal grand juries in the Northern Districts of Illinois (lysine) and Georgia (high fructose corn syrup) have been closed.
The Company has received notice that certain foreign governmental entities were commencing investigations to determine whether anticompetitive practices occurred in their jurisdictions. Except for the investigations being conducted by the Commission of the European Communities, the Mexican Federal Competition Commission and the Brazilian Department of Protection and Economic Defense as described below, all such matters have been resolved as previously reported. In June 1997, the Company and several of its European subsidiaries were notified that the Commission of the European Communities had initiated an investigation as to possible anticompetitive practices in the amino acid markets, in particular the lysine market, in the European Union. On October 29, 1998, the Commission of the European Communities initiated formal proceedings against the Company and others and adopted a Statement of Objections. The reply of the Company was filed on February 1, 1999 and the hearing was held on March 1, 1999. On August 8, 1999, the Commission of the European Communities adopted a supplementary Statement of Objections expanding the period of involvement as to certain other companies. On June 7, 2000, the Commission of the European Communities adopted a decision imposing a fine against the Company in the amount of EUR 47.3 million. The Company has appealed this decision. In September 1997, the Company received a request for information from the Commission of the European Communities with respect to an investigation being conducted by that Commission into the possible existence of certain agreements and/or concerted practices in the citric acid market in the European Union. On March 28, 2000, the Commission of European Communities initiated formal proceedings against the Company and others and adopted a Statement of Objections. The reply of the Company was filed on June 9, 2000. In November 1998, a European subsidiary of the Company received a request for information from the Commission of the European Communities with respect to an investigation being conducted by that Commission into the possible existence of certain agreements and/or concerted practices in the sodium gluconate market in the European Union. On May 17, 2000, the Commission of European Communities initiated formal proceedings against the Company and others and adopted a Statement of Objections. The reply of Company was filed on September 1, 2000. On February 11, 1999 a Mexican subsidiary of the Company was notified that the Mexican Federal Competition Commission had initiated an investigation as to possible anticompetitive practices in the citric acid market in Mexico. On November 22, 2000, the Company received an Official Letter of Responsibility from the Mexican Federal Competition Commission relative to this investigation. The reply of the Company was filed on January 30, 2001. On September 11, 2001, the Mexican Federal Competition Commission issued a resolution concluding the investigation and imposing a fine against the Company of approximately $50,000.
On May 8, 2000, a Brazilian subsidiary of the Company was notified of the commencement of an administrative proceeding by the Department of Protection and Economic Defense relative to possible anticompetitive practices in the lysine market in Brazil. On July 3, 2000, the Brazilian subsidiary of the Company filed a Statement of Defense in this proceeding.
Item 3. LEGAL PROCEEDINGS-Continued
The ultimate outcome and materiality of the proceedings of the Commission of the European Communities and the Brazilian Department of Protection and Economic Defense cannot presently be determined. The Company may become the subject of similar antitrust investigations conducted by the applicable regulatory authorities of other countries.
HIGH FRUCTOSE CORN SYRUP ACTIONS
The Company, along with other companies, has been named as a defendant in thirty-one antitrust suits involving the sale of high fructose corn syrup in the United States. Thirty of these actions have been brought as putative class actions.
FEDERAL ACTIONS. Twenty-two of these putative class actions allege violations of federal antitrust laws, including allegations that the defendants agreed to fix, stabilize and maintain at artificially high levels the prices of high fructose corn syrup, and seek injunctions against continued alleged illegal conduct, treble damages of an unspecified amount, attorneys fees and costs, and other unspecified relief. The putative classes in these cases comprise certain direct purchasers of high fructose corn syrup during certain periods in the 1990s. These twenty-two actions have been transferred to the United States District Court for the Central District of Illinois and consolidated under the caption In Re High Fructose Corn Syrup Antitrust Litigation, MDL No. 1087 and Master File No. 95-1477. On April 3, 2001, the Company and the other defendants filed motions for summary judgment. On August 23, 2001, the Court entered a written order granting the defendants' motions for summary judgment.
On January 14, 1997, the Company, along with other companies, was named a defendant in a non-class action antitrust suit involving the sale of high fructose corn syrup and corn syrup. This action which is encaptioned Gray & Co. v. Archer Daniels Midland Co., et al, No. 97-69-AS, and was filed in federal court in Oregon, alleges violations of federal antitrust laws and Oregon and Michigan state antitrust laws, including allegations that defendants conspired to fix, raise, maintain and stabilize the price of corn syrup and high fructose corn syrup, and seeks treble damages, attorneys' fees and costs of an unspecified amount. This action was transferred for pretrial proceedings to the United States District Court for the Central District of Illinois.
STATE ACTIONS. The Company, along with other companies, also has been named as a defendant in seven putative class action antitrust suits filed in California state court involving the sale of high fructose corn syrup. These California actions allege violations of the California antitrust and unfair competition laws, including allegations that the defendants agreed to fix, stabilize and maintain at artificially high levels the prices of high fructose corn syrup, and seek treble damages of an unspecified amount, attorneys fees and costs, restitution and other unspecified relief. One of the California putative classes comprises certain direct purchasers of high fructose corn syrup in the State of California during certain periods in the 1990s. This action was filed on October 17, 1995 in Superior Court for the County of Stanislaus, California and encaptioned Kagome Foods, Inc. v Archer-Daniels-Midland Co. et al., Civil Action No. 37236. This action has been removed to federal court and consolidated with the federal class action litigation pending in the Central District of Illinois referred to above. The other six California putative classes comprise certain indirect purchasers of high fructose corn syrup and dextrose in the State of California during certain periods in the 1990s. One such action was filed on July 21, 1995 in the Superior Court of the County of Los Angeles, California and is encaptioned Borgeson v. Archer-Daniels-Midland Co., et al., Civil Action No. BC131940. This
action and four other indirect purchaser actions have been coordinated before a single court in Stanislaus County, California under the caption, Food Additives (HFCS) cases, Master File No. 39693. The other four actions are encaptioned, Goings v. Archer Daniels Midland Co., et al.,Item 3. LEGAL PROCEEDINGS-Continued
Civil Action No. 750276 (Filed on July 21, 1995, Orange County Superior Court); Rainbow Acres v. Archer Daniels Midland Co., et al., Civil Action No. 974271 (Filed on November 22, 1995, San Francisco County Superior Court); Patane v. Archer Daniels Midland Co., et al., Civil Action No. 212610 (Filed on January 17, 1996, Sonoma County Superior Court); and St. Stan's Brewing Co. v. Archer Daniels Midland Co., et al., Civil Action No. 37237 (Filed on October 17, 1995, Stanislaus County Superior Court). On October 8, 1997, Varni Brothers Corp. filed a complaint in intervention with respect to the coordinated action pending in Stanislaus County Superior Court, asserting the same claims as those advanced in the consolidated class action.
The Company, along with other companies, also has been named a defendant in a putative class action antitrust suit filed in Alabama state court. The Alabama action alleges violations of the Alabama, Michigan and Minnesota antitrust laws, including allegations that defendants agreed to fix, stabilize and maintain at artificially high levels the prices of high fructose corn syrup, and seeks an injunction against continued illegal conduct, damages of an unspecified amount, attorneys' fees and costs, and other unspecified relief. The putative class in the Alabama action comprises certain indirect purchasers in Alabama, Michigan and Minnesota during the period March 18, 1994 to March 18, 1996. This action was filed on March 18, 1996 in the Circuit Court of Coosa County, Alabama, and is encaptioned Caldwell v. Archer-Daniels-Midland Co., et al., Civil Action No. 96-17. On April 23, 1997, the court granted the defendants' motion to sever and dismiss the non-Alabama claims. On March 27, 2000, defendants moved for summary judgment in light of a recent Alabama Supreme Court case holding that the Alabama antitrust laws apply only to intrastate commerce. On June 28, 2000 and August 11, 2000, plaintiffs filed amended complaints. On September 6, 2000 defendants moved to dismiss or in the alternative to strike plaintiffs' amended complaints. These motions are currently pending.
LYSINE ACTIONS
The Company, along with other companies, had been named as a defendant in twenty-three putative class action antitrust suits involving the sale of lysine in the United States and two putative class action antitrust suits in Canada involving the sale of lysine in Canada. Except for the actions specifically described below, all such suits have been settled, dismissed or withdrawn.
CANADIAN ACTIONS. The Company, along with other companies, has been named as a defendant in one putative class action antitrust suit filed in Ontario Court (General Division) in which the plaintiffs allege the defendants reached agreements with one another as to the price at which each of them would sell lysine to customers in Ontario and as to the total volume of lysine that each company would supply in Ontario in violation of Sections 45(1)(c) and 61(1)(b) of the Competition Act. The putative class is comprised of certain indirect purchasers in Ontario during the period from June 1, 1992 to June 27, 1995. The plaintiffs seek C$25 million for violations of the Competition Act, C$10 million in punitive, exemplary and aggravated damages, interest and costs of the action. This action was served upon the Company on June 11, 1999 and is encaptioned Rein Minnema and Minnema Farms Ltd. v. Archer-Daniels-Midland Company, et al., Court File No. G23495-99. The Company, along with other companies, has been named as a respondent in a motion seeking authorization to institute a class action filed on or about October 20, 1999 in Superior Court in the Province of Quebec, District of Montreal, in which the applicants allege the respondents conspired, combined, agreed or arranged to prevent or lessen, unduly, competition with respect to the sale of lysine in Canada in violation of Section 45(1)(c) of the Competition Act. The putative class is comprised of certain indirect purchasers in Quebec after June 1992. The applicants seek at least C$4.4 million, costs of investigation, attorneys' fees and interest. This motion is encaptioned Option Consommateurs, et al v. Archer-Daniels-Midland Company, et al., Court No. 500-06-000089-991.
Item 3. LEGAL PROCEEDINGS-Continued
STATE ACTION. The Company has been named as a defendant, along with other companies, in one putative class action antitrust suit alleging violations of the Alabama antitrust laws, including allegations that the defendants agreed to fix, stabilize and maintain at artificially high levels the prices of lysine, and seeking an injunction against continued alleged illegal conduct, damages of an unspecified amount, attorneys fees and costs, and other unspecified relief. The putative class in this action comprises certain indirect purchasers of lysine in the State of Alabama during certain periods in the 1990s. This action was filed on August 17, 1995 in the Circuit Court of DeKalb County, Alabama, and is encaptioned Ashley v. Archer-Daniels-Midland Co., et al., Civil Action No. 95-336. On March 13, 1998, the court denied plaintiff's motion for class certification. Subsequently, the plaintiff amended his complaint to add approximately 300 individual plaintiffs. On March 23, 2000, defendants filed a motion for summary judgment in light of a recent Alabama Supreme Court case holding that the Alabama antitrust laws apply only to intrastate commerce. On August 11, 2000, plaintiffs filed an amended complaint. On September 15, 2000, defendants moved to dismiss or in the alternative to strike plaintiffs' amended complaint. On July 19, 2001, the Court granted defendants' motion for summary judgment on plaintiffs' claim for restraint of trade in interstate commerce and granted defendants' motion to dismiss the plaintiffs' unjust enrichment claim. The Court denied defendants' motion to dismiss plaintiffs' restraint of trade in intrastate commerce claim, however, on July 3, 2001, plaintiffs voluntarily dismissed this claim. On July 18, 2001, plaintiffs moved to amend, alter or vacate the Court's dismissal of the unjust enrichment claim.
CITRIC ACID ACTIONS
The Company, along with other companies, had been named as a defendant in fourteen putative class action antitrust suits and two non-class action antitrust suits involving the sale of citric acid in the United States and five putative class action antitrust suits in Canada involving the sale of citric acid in Canada. Except for the action specifically described below, all such suits have been settled or dismissed.
CANADIAN ACTIONS. The Company, along with other companies, has been named as a defendant in five actions filed pursuant to the Class Proceedings Act, 1992, in which the plaintiffs allege that the defendants violated the Competition Act with respect to the sale of citric acid in Canada. One of these actions was filed on or about October 4, 1999 in the Superior Court of Justice in Newmarket, Ontario, and encaptioned Ashworth v. Archer-Daniels-Midland Company, et al., Court file No. 53510/99. The putative class is comprised of certain indirect purchasers in Ontario during the period from July 1, 1991 to June 27, 1995. The plaintiffs in this action seek general damages in the amount of C$30 million and punitive and exemplary damages in the amount of C$30 million, interest, costs and fees. The second action was filed on or about October 12, 1999 in the Superior Court of Justice in London, Ontario, and encaptioned Fairlee Fruit Juice Limited v. Archer-Daniels-Midland Company, et al., Court File No. 32562/99. The plaintiffs in this action seek general damages in the amount of C$300 million, punitive and exemplary damages in the amount of C$20 million, interest, costs and fees. The Company has become aware of, but has not yet been formally served with, a third action commenced in Barrie, Ontario in the (Ontario) Superior Court of Justice under the Class Proceedings Act. In that action, encaptioned E. D. Smith & Sons, Limited v. Archer Daniels Midland Company et al., Court File No. 99-B673, the putative class is persons or corporations who were resident or carried on business in Ontario and who were direct and indirect purchasers of citric acid between July 1, 1991 and July 27, 1995. The action claims damages in the amount of C$24 million for breach of the Competition Act, conspiracy and infliction of economic injury, plus C$10 million for punitive, exemplary and aggravated damages, plus interest and costs. All three Ontario actions referred to above have now been transferred to the Superior Court of Justice in Toronto, Ontario. The Company, along with
Item 3. LEGAL PROCEEDINGS-Continued
other companies, has been named as a respondent in a motion seeking authorization to institute a class action filed on or about October 20, 1999 in Superior Court in the Province of Quebec, District of Montreal, in which the applicants allege the respondents conspired, combined, agreed or arranged to prevent or lessen, unduly, competition with respect to the sale of citric acid in Canada in violation of Section 45(1)(c) of the Competition Act. The putative class is comprised of certain indirect purchasers in Quebec since July 1991. The applicants seek C$3.1 million, the costs of investigation, attorneys' fees and interest. This motion is encaptioned Option Consommateurs, et al. v. Archer-Daniels-Midland-Company, et al., Court No.500-06-000094-991. The Company, along with other companies, has been named as a defendant in an action concerning the price at which the Company sold citric acid between 1991 and 1995, commenced in The Supreme Court of British Columbia, encaptioned Sun-Rype Ltd. v. Archer Daniels Midland Company et al., Court File No. L003223 (Vancouver Registry), pursuant to the British Columbia Class Proceedings Act. An unspecified amount of damages is claimed for conspiracy, intentional interference with economic relations and breach of the Competition Act, in addition to punitive and exemplary damages and interest and costs.
HIGH FRUCTOSE CORN SYRUP/CITRIC ACID STATE CLASS ACTIONS
The Company, along with other companies, has been named as a defendant in five putative class action antitrust suits involving the sale of both high fructose corn syrup and citric acid. Two of these actions allege violations of the California antitrust and unfair competition laws, including allegations that the defendants agreed to fix, stabilize and maintain at artificially high levels the prices of high fructose corn syrup and citric acid, and seek treble damages of an unspecified amount, attorneys fees and costs, restitution and other unspecified relief. The putative class in one of these California cases comprises certain direct purchasers of high fructose corn syrup and citric acid in the State of California during the period January 1, 1992 until at least October 1995. This action was filed on October 11, 1995 in the Superior Court of Stanislaus County, California and is entitled Gangi Bros. Packing Co. v. Archer-Daniels-Midland Co., et al., Civil Action No. 37217. The putative class in the other California case comprises certain indirect purchasers of high fructose corn syrup and citric acid in the state of California during the period October 12, 1991 until November 20, 1995. This action was filed on November 20, 1995 in the Superior Court of San Francisco County and is encaptioned MCFH, Inc. v. Archer-Daniels-Midland Co., et al., Civil Action No. 974120. The California Judicial Council has bifurcated the citric acid and high fructose corn syrup claims in these actions and coordinated them with other actions in San Francisco County Superior Court and Stanislaus County Superior Court. As noted in prior filings, the Company accepted a settlement agreement with counsel for the citric acid plaintiff class. This settlement received final court approval and the case was dismissed on September 30, 1998. The Company, along with other companies, also has been named as a defendant in at least one putative class action antitrust suit filed in West Virginia state court involving the sale of high fructose corn syrup and citric acid. This action also alleges violations of the West Virginia antitrust laws, including allegations that the defendants agreed to fix, stabilize and maintain at artificially high levels the prices of high fructose corn syrup and citric acid, and seeks treble damages of an unspecified amount, attorneys fees and costs, and other unspecified relief. The putative class in the West Virginia action comprises certain entities within the State of West Virginia that purchased products containing high fructose corn syrup and/or citric acid for resale from at least 1992 until 1994. This action was filed on October 26, 1995, in the Circuit Court for Boone County, West Virginia, and is encaptioned Freda's v. Archer-Daniels-Midland Co., et al., Civil Action No. 95-C-125. The Company, along with other companies, also has been named as a defendant in a putative class action antitrust suit filed in the Superior Court for the District of Columbia involving the sale of high fructose corn syrup and citric acid. This action
Item 3. LEGAL PROCEEDINGS-Continued
alleges violations of the District of Columbia antitrust laws, including allegations that the defendants agreed to fix, stabilize and maintain at artificially high levels the prices of high fructose corn syrup and citric acid, and seeks treble damages of an unspecified amount, attorneys fees and costs, and other unspecified relief. The putative class in the District of Columbia action comprises certain persons within the District of Columbia that purchased products containing high fructose corn syrup and/or citric acid during the period January 1, 1992 through December 31, 1994. This action was filed on April 12, 1996 in the Superior Court for the District of Columbia, and is encaptioned Holder v. Archer-Daniels-Midland Co., et al., Civil Action No. 96-2975. On November 13, 1998, plaintiff's motion for class certification was granted. The Company, along with other companies, has been named as a defendant in a putative class action antitrust suit filed in Kansas state court involving the sale of high fructose corn syrup and citric acid. This action alleges violations of the Kansas antitrust laws, including allegations that the defendants agreed to fix, stabilize and maintain at artificially high levels the prices of high fructose corn syrup and citric acid, and seeks treble damages of an unspecified amount, court costs and other unspecified relief. The putative class in the Kansas action comprises certain persons within the State of Kansas that purchased products containing high fructose corn syrup and/or citric acid during at least the period January 1, 1992 through December 31, 1994. This action was filed on May 7, 1996 in the District Court of Wyandotte County, Kansas and is encaptioned Waugh v. Archer-Daniels-Midland Co., et al., Case No. 96-C-2029. Plaintiff's motion for class certification is currently pending.
HIGH FRUCTOSE CORN SYRUP/CITRIC ACID/LYSINE STATE CLASS ACTIONS
The Company, along with other companies, has been named as a defendant in six putative class action antitrust suits filed in California state court involving the sale of high fructose corn syrup, citric acid and/or lysine. These actions allege violations of the California antitrust and unfair competition laws, including allegations that the defendants agreed to fix, stabilize and maintain at artificially high levels the prices of high fructose corn syrup, citric acid and/or lysine, and seek treble damages of an unspecified amount, attorneys fees and costs, restitution and other unspecified relief. One of the putative classes is comprised of certain direct purchasers of high fructose corn syrup, citric acid and/or lysine in the State of California during a certain period in the 1990s. This action was filed on December 18, 1995 in the Superior Court for Stanislaus County, California and is encaptioned Nu Laid Foods, Inc. v. Archer-Daniels-Midland Co., et al., Civil Action No. 39693. The other five putative classes comprise certain indirect purchasers of high fructose corn syrup, citric acid and/or lysine in the State of California during certain periods in the 1990s. One such action was filed on December 14, 1995 in the Superior Court for Stanislaus County, California and is encaptioned Batson v. Archer-Daniels-Midland Co., et al., Civil Action No. 39680. The other actions are encaptioned Nu Laid Foods, Inc. v. Archer Daniels Midland Co., et al., No 39693 (Filed on December 18, 1995, Stanislaus County Superior Court); Abbott v. Archer Daniels Midland Co., et al., No. 41014 (Filed on December 21, 1995, Stanislaus County Superior Court); Noldin v. Archer
Daniels Midland Co., et al., No. 41015 (Filed on December 21, 1995, Stanislaus County Superior Court); Guzman v. Archer Daniels Midland Co., et al., No. 41013 (Filed on December 21, 1995, Stanislaus County Superior Court) and Ricci v. Archer Daniels Midland Co., et al., No. 96-AS-00383 (Filed on February 6, 1996, Sacramento County Superior Court). As noted in prior filings, the plaintiffs in these actions and the lysine defendants have executed a settlement agreement that has been approved by the court, and the California Judicial Council has bifurcated the citric acid and high fructose corn syrup claims and coordinated them with other actions in San Francisco County Superior Court and Stanislaus County Superior Court.
Item 3. LEGAL PROCEEDINGS-Continued
MONOSODIUM GLUTAMATE ACTIONS
The Company, along with other companies, has been named as a defendant in twelve putative class action antitrust suits involving the sale of monosodium glutamate and/or other food flavor enhancers in the United States and one putative class action antitrust suit in Canada involving the sale of nucleotides, including monosodium glutamate, in Canada.
CANADIAN ACTIONS. The Company, along with other companies, has been named as a defendant in an action filed pursuant to the Class Proceedings Act, 1992, in which the plaintiffs allege that the defendants violated the Competition Act with respect to the sale of nucleotides in Canada. This action was filed on or about September 7, 2001 in the Superior Court of Justice in Toronto, Ontario, and is encaptioned Long Duc Ngo and Christopher McLean v. Ajinomoto U.S.A., Inc., et al., Court File No. 37708. The putative class is comprised of direct and indirect purchasers in Canada during the period from January 1, 1990 to November 1, 1999. The plaintiffs in this action seek general damages in the amount of C$20 million, punitive and exemplary damages in the amount of C$2 million and "disgorgement of ill-gotten overcharges", plus prejudgment interest.
FEDERAL ACTIONS. Eight of these putative class actions allege violations of federal antitrust laws, including allegations that the defendants agreed to fix, stabilize and maintain at artificially high levels the price of monosodium glutamate, disodium inosinate and disodium guanylate, and seek various relief, including treble damages of an unspecified amount, attorneys fees and costs, and other unspecified relief. The putative classes in these cases comprise certain direct purchasers of monosodium glutamate, disodium inosinate and/or disodium guanylate during certain periods in the 1990's to the present. The Company has never produced or sold disodium inosinate or disodium guanylate. One such action was filed on October 27, 1999 in the United States District Court for the Northern District of California and is encaptioned Thorp, Inc. v. Archer-Daniels-Midland Company, et al., NoC99 4752 (VRW). The second action was filed on October 27, 1999 in the United States District Court for the Northern District of California and is encaptioned Premium Ingredients, Ltd. v. Archer-Daniels-Midland Co., et al., No. C 99 4742(MJJ). The third action was filed on October 28, 1999 in the United States District Court for the Northern District of California and is encaptioned Felbro Food Products v. Archer-Daniels-Midland Company, et al., No.C99 4761(MJJ). The fourth action was filed on November 17, 1999 in the United States District Court for the Northern District of California and is encaptioned First Spice Mixing Co., Inc. v. Archer Daniels Midland Co., et al., No. C 99 4977 (PJH). The fifth action was filed on November 23, 1999 in the United States District Court for the District of New Jersey and is encaptioned Diversified Foods and Seasonings, Inc. v. Archer Daniels Midland Co., Inc. et al., No. 99 CV 5501. The sixth action was filed on December 16, 1999 in the United States District Court for the Eastern District of New York and is encaptioned M. Phil Yen, Inc. v. Ajinomoto Co. Inc., et al., No. 99 Div 06514 (EK). The seventh action was filed on January 27, 2000 in the Northern District of California and is
encaptioned Chicago Ingredients, Inc. v. Archer-Daniels-Midland Co., et al., No. C 00 0308 (JL). The eighth action was filed on April 12, 2000 in the Eastern District of Pennsylvania and is encaptioned Heller Seasonings & Ingredients, Inc. v. Ajinomoto U.S.A., Inc., et al., No. 00-CV-1905. The Judicial Panel on Multidistrict Litigation has consolidated these actions for coordinated pretrial discovery in the United States District Court of the District of Minnesota. On June 3, 2001, the Court granted the plaintiffs' motion for class certification.
Item 3. LEGAL PROCEEDINGS-Continued
STATE ACTION. The Company, along with at least one other company, has been named as a defendant in four putative class action antitrust suits filed in California state court involving the sale of monosodium glutamate and/or other food flavor enhancers. These actions allege violations of California antitrust and unfair competition laws, including allegations that the defendants agreed to fix, stabilize and maintain at artificially high levels the price of monosodium glutamate and/or other food flavor enhancers, and seek treble damages of an unspecified amount, restitution, attorneys' fees and costs, and other unspecified relief. The putative classes in these actions comprise certain indirect purchasers of monosodium glutamate and/or other food flavor enhancers in the State of California during certain periods in the 1990's. The first action originally was filed on June 25, 1999 in the Superior Court of San Francisco County and in encaptioned Fu's Garden Restaurant v. Archer-Daniels-Midland Company, et al., Civil Action No. 304471. The second action was filed on January 14, 2000 in the Superior Court of San Francisco County and is encaptioned JMN Restaurant Management, Inc. v. Ajinomoto Co., Inc., et al., Civil Action No. 309236. The third action was filed on May 2, 2000 in the Superior Court of San Francisco County and is encaptioned Tanuki Restaurant and Lilly Zapanta v. Archer Daniels Midland Co., et al, Civil Action No. 311871. The fourth action was filed on May 24, 2000 in the Superior Court of San Francisco County and is encaptioned Tasty Sunrise Burgers v. Archer Daniels Midland Co., et al., Civil Action No. 312373. On June 19, 2000, the court consolidated all of these cases for pretrial and trial purposes.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
PART II
Item 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
Information responsive to this Item is set forth in "Common Stock Market Prices and Dividends" of the annual shareholders' report for the year ended June 30, 2001 and is incorporated herein by reference.
Item 6. SELECTED FINANCIAL DATA
Information responsive to this Item is set forth in the "Ten-Year Summary of Operating, Financial and Other Data" of the annual shareholders' report for the year ended June 30, 2001 and is incorporated herein by reference.
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Information responsive to this Item is set forth in "Management's Discussion of Operations and Financial Condition" of the annual shareholders' report for the year ended June 30, 2001 and is incorporated herein by reference.
Item 7A. QUANTITIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Information responsive to this Item is set forth in "Management's Discussion of Operations and Financial Condition" of the annual shareholders' report for the year ended June 30, 2001 and is incorporated herein by reference.
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The following financial statements and supplementary data included in the annual shareholders' report for the year ended June 30, 2001 are incorporated herein by reference:
Consolidated balance sheets--June 30, 2001 and 2000
Consolidated statements of earnings--Years ended
June 30, 2001, 2000 and 1999
Consolidated statements of shareholders' equity--Years ended
June 30, 2001, 2000 and 1999
Consolidated statements of cash flows--Years ended
June 30, 2001, 2000 and 1999
Notes to consolidated financial statements--June 30, 2001
Summary of Significant Accounting Policies
Report of Independent Auditors
Quarterly Financial Data (Unaudited)
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
None.
PART III
Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Information with respect to directors and executive officers is set forth in "Election of Directors" and "Section 16(a) Beneficial Ownership Reporting Compliance" of the definitive proxy statement for the Company's annual meeting of Stockholders to be held on November 1, 2001 and is incorporated herein by reference. Certain information with respect to executive officers is included in Item 1(e) of this report.
Item 11. EXECUTIVE COMPENSATION
Information responsive to this Item is set forth in "Executive Compensation" and "Compensation Committee Report" of the definitive proxy statement for the Company's annual meeting of Stockholders to be held on November 1, 2001 and is incorporated herein by reference.
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Information responsive to this Item is set forth in "Principal Holders of Voting Securities" and "Election of Directors" of the definitive proxy statement for the Company's annual meeting of Stockholders to be held on November 1, 2001 and is incorporated herein by reference.
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Information responsive to this Item is set forth in "Certain Relationships and Related Transactions" of the definitive proxy statement for the Company's annual meeting of Stockholders to be held on November 1, 2001 and is incorporated herein by reference.
PART IV
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a)(1) The following consolidated financial statements and other financial data of the registrant and its subsidiaries, included in the annual report of the registrant to its shareholders for the year ended June 30, 2001, are incorporated by reference in Item 8, and are also incorporated herein by reference:
Consolidated balance sheets--June 30, 2001 and 2000
Consolidated statements of earnings--Years ended
June 30, 2001, 2000 and 1999
Consolidated statements of shareholders' equity-
Years ended June 30, 2001, 2000 and 1999
Consolidated statements of cash flows--Years ended
June 30, 2001, 2000 and 1999
Notes to consolidated financial statements--June 30, 2001
Summary of Significant Accounting Policies
Quarterly Financial Data (Unaudited)
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM
8-K-Continued
(a)(2) Financial Statement Schedules
|
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES |
|||||||||||
|
Balance at |
Balance at |
||||||||||
|
Beginning |
End |
||||||||||
|
|
|
of Year |
|
Additions |
|
Deductions (1) |
|
Other (2) |
|
of Year |
|
|
(In thousands) |
|||||||||||
|
Classification |
|||||||||||
|
Allowance for doubtful accounts |
|||||||||||
|
1999 |
$ 50,597 |
15,212 |
(11,634) |
(6,966) |
$ 47,209 |
||||||
|
2000 |
$ 47,209 |
22,230 |
(26,028) |
3,162 |
$ 46,573 |
||||||
|
2001 |
$ 46,573 |
7,802 |
(6,235) |
(1,124) |
$ 47,016 |
||||||
|
(1) Uncollectible accounts written off, net of recoveries |
|||||||||||
|
(2) Impact of business combinations and foreign currency exchange adjustments |
|||||||||||
All other schedules are either not required, not applicable or the information is otherwise included.
(a)(3) LIST OF EXHIBITS
(3)(i) Composite Certificate of Incorporation, as amended, filed as Exhibit (3)(i) to Form 10-K for the year ended June 30, 1999 (File No. 1-44) is incorporated herein by reference.
(ii) Bylaws, as amended and restated, filed on May 12, 2000 as Exhibit 3(ii) to Form 10-Q for the quarter ended March 31, 2000, are incorporated herein by reference.
the $300,000,000 - 8 7/8% Debentures due April 15, 2011,
the $300,000,000 - 8 3/8% Debentures due April 15, 2017,
the $300,000,000 - 8 1/8% Debentures due June 1, 2012,
the $250,000,000 - 6 1/4% Notes due May 15, 2003,
the $250,000,000 - 7 1/8% Debentures due March 1, 2013,
the $350,000,000 - 7 1/2% Debentures due March 15, 2027,
the $200,000,000 - 6 3/4% Debentures due December 15, 2027,
the $250,000,000 - 6 7/8% Debentures due December 15, 2097,
the $196,210,000 - 5 7/8% Debentures due November 15, 2010,
the $300,000,000 - 6 5/8% Debentures due May 1, 2029.
and the $400,000,000 - 7% Debentures due February 1, 2031.
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM
8-K-Continued
Copies of constituent instruments defining rights of holders of long-term debt of the Company and Subsidiaries, other than the Indentures specified herein, are not filed herewith, pursuant to Instruction (b)(4) (iii)(A) to Item 601 of Regulation S-K, because the total amount of securities authorized under any such instrument does not exceed 10% of the total assets of the Company and Subsidiaries on a consolidated basis. The registrant hereby agrees that it will, upon request by the Commission, furnish to the Commission a copy of each such instrument.
(10) Material Contracts--Copies of the Company's stock option and stock unit plans, deferred compensation plan, and savings and investment plans, pursuant to Instruction (10)(iii)(A) to Item 601 of Regulation S-K, each of which is a management contract or compensation plan or arrangement required to be filed as an exhibit pursuant to Item 14(c) of Form 10-K, are incorporated herein by reference as follows:
(i) Exhibits 4(c) and 4(d) to Registration Statement No. 33-49409 on Form S-8 dated March 15, 1993 relating to the Archer Daniels Midland 1991 Incentive Stock Option Plan and Archer Daniels Midland Company Savings and Investment Plan.
(ii) Exhibits 4(c) and 4(d) to Registration Statement No. 333-39605 on Form S-8 dated November 5, 1997 relating to the ADM Savings and Investment Plan for Salaried Employees and the ADM Savings and Investment Plan for Hourly Employees.
(iii) Exhibit 4 to Registration Statement No. 333-51381 on Form S-8 dated April 30, 1998 relating to the Archer-Daniels-Midland Company 1996 Stock Option Plan.
(iv) The Archer-Daniels-Midland Company Stock Unit Plan for Nonemployee Directors (incorporated by reference to Exhibit 10 to the Company's Quarterly Report on Form 10-Q for the quarter ended December 31, 1997, (File No. 1-44)).
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM
8-K-Continued
(13) Portions of annual report to shareholders incorporated by reference
(21) Subsidiaries of the registrant
(23) Consent of independent auditors
(24) Powers of attorney
(b) Reports on Form 8-K
A Form 8-K was not filed during the quarter ended June 30, 2001.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Date: September 27, 2001
ARCHER-DANIELS-MIDLAND COMPANY
By: /s/ D. J. Smith
D. J. Smith
Vice President, Secretary
and General Counsel
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below on September 27, 2001, by the following persons on behalf of the Registrant and in the capacities indicated.
|
/s/ G. A. Andreas |
/s/ F. R. Johnson |
|
G. A. Andreas*, |
F. R. Johnson*, |
|
Chief Executive and Director |
Director |
|
(Principal Executive Officer) |
|
|
/s/ D. J. Mimran |
|
|
/s/D. J. Schmalz |
D. J. Mimran*, |
|
D. J. Schmalz |
Director |
|
Vice President and |
|
|
Chief Financial Officer |
/s/ M. B. Mulroney |
|
(Principal Financial Officer) |
M. B. Mulroney*, |
|
Director |
|
|
/s/S. R. Mills |
|
|
S. R. Mills |
/s/ R. S. Strauss |
|
Vice President and Controller |
R. S. Strauss*, |
|
(Controller) |
Director |
|
/s/ D. O. Andreas |
/s/ J. K. Vanier |
|
D. O. Andreas* |
J. K. Vanier*, |
|
Director |
Director |
|
/s/ J. R. Block |
/s/ O. G. Webb |
|
J. R. Block*, |
O. G. Webb*, |
|
Director |
Director |
|
/s/ R. R. Burt |
/s/ A. Young |
|
R. R. Burt*, |
A. Young*, |
|
Director |
Director |
|
/s/ Mrs. M. H. Carter |
/s/ D. J. Smith |
|
Mrs. M. H. Carter*, |
Attorney-in-Fact |
|
Director |
|
|
/s/ H. de Boon |
|
|
H. de Boon, |
|
|
Director |
*Powers of Attorney authorizing D. J. Schmalz, S. R. Mills and D. J. Smith and each of them, to sign the Form 10-K on behalf of the above-named officers and directors of the Company copies of which are being filed with the Securities and Exchange Commission.
MANAGEMENT'S DISCUSSION OF
OPERATIONS AND FINANCIAL CONDITION - JUNE 30, 2001
Operations
The Company is principally engaged in procuring, transporting, storing, processing and merchandising agricultural commodities and products. The Oilseeds & Corn Processing Segment processes oilseeds and corn, and sells the resulting processed products as food or feed ingredients or for industrial uses. The Agricultural Services Segment utilizes the Company's vast grain elevator and transportation network to buy, store, clean and transport agricultural commodities, such as oilseeds, corn, wheat, milo, oats and barley, and resells these commodities primarily as food or feed ingredients. A summary of net sales and other operating income by reportable segment is as follows:
|
|
2001 |
2000 |
1999 |
|
|
(in millions) |
||
|
Oilseeds & Corn Processing |
$ 10,464 |
$ 10,109 |
$ 10,727 |
|
Agricultural Services |
5,644 |
4,640 |
3,574 |
|
Other |
3,943 |
3,863 |
4,209 |
|
|
$ 20,051 |
$ 18,612 |
$ 18,510 |
2001 compared to 2000
Sales and other operating income increased 8 percent to $20.1 billion due to increased average selling prices and increased volumes of grain merchandised. Oilseeds & Corn Processing sales increased 4 percent to $10.5 billion due primarily to higher average selling prices and, to a lesser extent, increased sales volumes. These volume and price increases were due principally to increased world-wide demand for protein meal due to meat and bone meal restrictions stemming from Bovine Spongiform Encephalopathy (BSE) concerns and to increased demand for fuel alcohol arising from new market expansions and higher gasoline prices. Partially offsetting these increases were decreased vegetable oil selling prices resulting from industry wide record vegetable oil stocks. Agricultural Services sales increased 22 percent to $5.6 billion due to increased sales volumes attributable principally to the Company's recently-established Latin American merchandising offices. Other sales increased due primarily to increased demand for the Company's cocoa products and to increased volumes and higher average selling prices for the Company's amino acid products due to increases in competing protein meal prices. Partially offsetting these increases were decreased sales volumes and price of wheat flour and other milled products due to weak demand for the products, customer consolidations and industry production overcapacity.
Cost of products sold increased $1.2 billion to $18.6 billion due primarily to increased volumes of grain merchandised and to higher energy and fuel costs. Raw agricultural commodity prices remained relatively unchanged for the year.
Gross profit increased $212 million to $1.4 billion due principally to increased profits in Oilseeds & Corn Processing due to strong worldwide demand for protein meals and to increased sales volume and higher average selling prices of fuel alcohol. These increases in profits were partially offset by significantly higher energy and fuel related costs. Agricultural Services gross profit decreased slightly for the year due to difficult operating conditions for the Company's barge and towboat operations stemming from ice and flooding on the Mississippi River and to high fuel prices. This decrease was partially offset by increased grain merchandising margins.
Selling, general and administrative expenses increased $2 million for the year to $731 million due principally to $4 million of expenses attributable to recently acquired operations and to increased advertising and promotional expenses. These increases were partially offset by decreased bad debt expense and decreased salary-related costs associated with the prior year's facility closures and consolidations.
Other expense increased $42 million to $179 million due principally to realized losses on marketable securities transactions and increased interest expense due to higher average borrowing rates and reduced capitalized interest. These increases were partially offset by increased equity in earnings of unconsolidated affiliates and by increased investment income. The increase in earnings of unconsolidated affiliates resulted primarily from a gain of $95 million representing the Company's equity share of the gain reported by the Company's unconsolidated affiliate, Compagnie Industrelle et Financiere des Produits Amylaces SA ("CIP"), upon the sale of its interests in wet corn milling and wheat starch production businesses. This increase was partially offset by decreased equity in earnings of unconsolidated affiliates resulting primarily from lower valuations of the Company's private equity fund investments. The increase in investment income was due primarily to interest on income tax refunds related to IRS settlements.
The increase in income taxes for 2001 resulted primarily from higher pretax earnings and to a $60 million tax credit in 2000 related to a redetermination of foreign sales corporation benefits for prior years and the resolution of various other tax issues. The Company's effective income tax rate for 2001 was 27 percent, reflecting no taxes being provided on the gain related to the aforementioned CIP transaction. CIP is a foreign corporate joint venture and CIP intends to permanently reinvest the proceeds from the sale. Excluding the effects of the CIP transaction in 2001 and the $60 million tax credit in 2000, the Company's effective tax rate for both 2001 and 2000 was approximately 32 percent.
2000 compared to 1999
Net sales and other operating income increased 1 percent to $18.6 billion for 2000 due principally to increased volumes of grain merchandised partially offset by decreased average selling prices. Oilseeds & Corn Processing sales decreased by 6 percent to $10.1 billion due primarily to lower average selling prices reflecting the lower cost of raw materials. Partially offsetting this decrease were increased sales volume of the Company's fuel alcohol arising from good demand from existing sales markets and expansion into new markets due to higher gasoline prices and relative ethanol pricing. Agricultural Services sales were up 30 percent to $4.6 billion due primarily to increased sales volumes attributable to strong domestic demand of specialty grains and to sales of the Company's newly-established Latin American merchandising offices. These volume increases were offset by lower average selling prices reflecting the lower costs of raw materials. Sales of other products and services decreased 9 percent to $3.9 billion due principally to lower average selling prices of the Company's wheat milling, cocoa and formula feed businesses reflecting the lower costs of raw materials. This decrease was partially offset by sales attributable to recently acquired wheat milling operations in the United Kingdom and the Caribbean.
Cost of products sold and other operating costs increased $115 million to $17.4 billion due primarily to increased volumes of grain merchandised. This increase was partially offset by lower average raw material costs arising from an abundant worldwide supply of agricultural commodities.
Gross profit decreased $12 million to $1.2 billion in 2000 due primarily to a $108 million charge to cost of products sold related to the abandonment of certain long-lived assets and other asset write-downs. This decrease was partially offset by increased profits in Agricultural Services due to increased volumes and margins attributable to grain merchandising and to increased profits in Oilseeds & Corn Processing due to good demand for vegetable oils and fuel ethanol. The profits of Other Products and Services increased primarily due to higher average selling prices of the Company's amino acid products and to reduced operating costs and improved efficiencies related to the Company's cocoa operations.
Selling, general and administrative expenses increased $28 million for the year to $729 million due principally to $26 million of expenses attributable to recently acquired operations and to newly established international merchandising offices. Increased bad debt expense and increased severance costs associated with facility closures and consolidations were offset by decreased advertising expenses.
Other expense increased $26 million to $137 million due principally to decreased gains on marketable securities transactions and increased interest expense due to both higher average borrowing levels and higher short-term borrowing rates. These increases were partially offset by increased equity in earnings of unconsolidated affiliates resulting primarily from higher valuations of the Company's private equity funds.
The decrease in income taxes for 2000 resulted primarily from a $60 million tax credit related to a redetermination of foreign sales corporation benefits for prior years and the resolution of various other tax issues. To a lesser extent, income taxes decreased due to lower pretax earnings. The Company's effective income tax rate for 2000, excluding the aforementioned credit, was 32 percent compared to an effective rate of 33 percent for 1999.
Liquidity and Capital Resources
At June 30, 2001, the Company continued to show substantial liquidity with working capital of $2.3 billion. Capital resources remained strong as reflected in the Company's net worth of $6.3 billion. The principal sources of capital during the year were funds generated from operations and funds generated from the issuance of $400 million of 7% debentures due in 2031. The principal uses of capital during the year were investments in property, plant and equipment, investments in affiliates and business acquisitions. The Company's ratio of long-term debt to total capital (the sum of the Company's long-term debt, deferred liabilities and shareholders' equity) at both June 30, 2001 and 2000 was approximately 32 percent. This ratio is a measure of the Company's long-term liquidity and is an indicator of financial flexibility. Annual maturities of long-term debt for the five years after June 30, 2001 are $382 million, $272 million, $44 million, $112 million and $119 million, respectively.
Commercial paper and commercial bank lines of credit are available to meet seasonal cash requirements. At June 30, 2001, the Company had $2.1 billion of short-term bank credit lines. Standard & Poor's and Moody's rate the Company's commercial paper as A-1 and P-1, respectively, and rate the Company's long-term debt as A+ and A1, respectively. In addition to the cash flow generated from operations, the Company has access to equity and debt capital through numerous alternatives from public and private sources in domestic and international markets.
Market Risk Sensitive Instruments and Positions
The market risk inherent in the Company's market risk sensitive instruments and positions is the potential loss arising from adverse changes in commodity prices, marketable equity security prices, foreign currency exchange rates and interest rates as described below.
Commodities
The availability and price of agricultural commodities are subject to wide fluctuations due to unpredictable factors such as weather, plantings, government (domestic and foreign) farm programs and policies, changes in global demand resulting from population growth and higher standards of living, and global production of similar and competitive crops. To reduce price risk caused by market fluctuations, the Company generally follows a policy of using exchange-traded futures contracts to minimize its net position of merchandisable agricultural commodity inventories and forward cash purchase and sales contracts. In addition, the Company from time to time enters into futures contracts which are designated as hedges of specific volumes of commodities that will be purchased and processed in a future month. The changes in the market value of such futures contracts has historically been, and is expected to continue to be, highly effective at offsetting changes in price movements of the hedged item. Gains and losses arising from open and closed hedging transactions are deferred in other comprehensive income, net of applicable taxes, and recognized in the statement of earnings when the finished goods produced from the hedged items are sold.
A sensitivity analysis has been prepared to estimate the Company's exposure to market risk of its commodity position. The Company's daily net commodity position consists of inventories, related purchase and sale contracts, and exchange-traded futures contracts, including those to hedge portions of production requirements. The fair value of such position is a summation of the fair values calculated for each commodity by valuing each net position at quoted futures prices. Market risk is estimated as the potential loss in fair value resulting from a hypothetical 10 percent adverse change in such prices. The results of this analysis, which may differ from actual results, are as follows.
|
|
2001 Fair Value Market Risk |
2000 Fair Value Market Risk |
||
|
|
(in millions) |
|||
|
Highest long position |
$ 237 |
$24 |
$254 |
$25 |
|
Highest short position |
302 |
30 |
293 |
29 |
|
Average position long (short) |
(52) |
5 |
(25) |
2 |
The decrease in fair value of the average position for 2001 compared to 2000 was principally a result of a decrease in the daily net commodity position and, to a lesser extent, from a decrease in quoted futures prices.
Marketable Equity Securities
Marketable equity securities, which are recorded at fair value, have exposure to price risk. The fair value of marketable equity securities is based on quoted market prices. Risk is estimated as the potential loss in fair value resulting from a hypothetical 10 percent adverse change in quoted market prices. Actual results may differ.
|
|
2001 |
2000 |
|
|
(in millions) |
|
|
Fair value |
$699 |
$576 |
|
Market risk |
70 |
58 |
The increase in fair value for 2001 compared to 2000 resulted primarily from an increase in quoted market prices and, to a lesser extent, to disposals of securities.
Currencies
In order to reduce the risk of foreign currency exchange rate fluctuations, the Company follows a policy of hedging substantially all transactions, except for amounts permanently invested as described below, denominated in a currency other than the functional currencies applicable to each of its various entities. The instruments used for hedging are readily marketable exchange-traded futures contracts and forward contracts with banks. The changes in market value of such contracts have a high correlation to the price changes in the currency of the related hedged transactions. The potential loss in fair value for such net currency position resulting from 10 percent adverse change in foreign currency exchange rates is not material.
The amount the Company considers permanently invested in foreign subsidiaries and affiliates and translated into dollars using the year-end exchange rate is $2.3 billion at June 30, 2001 and $2.1 billion at June 30, 2000. This increase is due to additional investments and earnings of the subsidiaries and affiliates, partially offset by a decrease due to changes in exchange rates. The potential loss in fair value resulting from a hypothetical 10 percent adverse change in quoted foreign currency exchange rates amounts to $232 million and $207 million for 2001 and 2000, respectively. Actual results may differ.
Interest
The fair value of the Company's long-term debt is estimated below using quoted market prices, where available, and discounted future cash flows based on the Company's current incremental borrowing rates for similar types of borrowing arrangements. Such fair value exceeded the long-term debt carrying value. Market risk is estimated as the potential increase in fair value resulting from a hypothetical one-half percent decrease in interest rates.
|
|
2001 |
2000 |
|
|
(in millions) |
|
|
Fair value of long-term debt |
$3,553 |
$3,279 |
|
Excess of fair value over carrying value |
202 |
2 |
|
Market risk |
190 |
140 |
The increase in fair value for the current year resulted from both the issuance of long-term debt and the effect of a decrease in quoted interest rates.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature of Business
The Company is principally engaged in the procuring, transporting, storing, processing, and merchandising of agricultural commodities and products.
Principles of Consolidation
The consolidated financial statements include the accounts of the Company and its majority-owned subsidiaries over which the Company exercises control. Investments in affiliates are carried at cost plus equity in undistributed earnings since acquisition.
Use of Estimates
The preparation of consolidated financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect amounts reported in its consolidated financial statements and accompanying notes. Actual results could differ from those estimates.
Cash Equivalents
The Company considers all highly liquid investments with a maturity of three months or less at the time of purchase to be cash equivalents.
Marketable Securities
The Company classifies all of its marketable securities as available-for-sale. Available-for-sale securities are carried at fair value, with the unrealized gains and losses, net of income taxes, reported as a component of other comprehensive income (loss). The Company uses the specific identification method when securities are sold or classified out of accumulated other comprehensive income (loss) into earnings.
Inventories
Inventories of merchandisable agricultural commodities, which include amounts acquired under deferred pricing contracts, are stated at market value. The Company also values certain inventories using the lower of cost, determined by either the last-in, first-out (LIFO) or first-in, first-out (FIFO) methods, or market.
Property, Plant and Equipment
Property, plant and equipment are recorded at cost. The Company generally uses the straight-line method in computing depreciation for financial reporting purposes and generally uses accelerated methods for income tax purposes. The annual provisions for depreciation have been computed principally in accordance with the following ranges of asset lives: buildings - 10 to 50 years; machinery and equipment - 3 to 30 years.
Asset Abandonments and Write-Downs
The Company recorded a $108 million charge in cost of products sold during the fourth quarter of fiscal year 2000 principally related to the abandonment of certain assets. The majority of the assets were idle and the decision to abandon was finalized after consideration of the ability to utilize the assets for their intended purpose, employ the assets in alternative uses or sell the assets to recover the carrying value. The remaining assets were in use in a product line, which are being marketed for sale, but were written down to fair value to recognize an impairment in the value of the assets. After the write down, the carrying value of these assets are immaterial.
Net Sales
The Company follows a policy of recognizing sales at the time of product shipment. Effective July 1, 2000, the Company adopted Emerging Issues Task Force Issue 99-19, "Reporting Revenue Gross as a Principal Versus Net as an Agent". The adoption of this issue results in the Company reporting the total sales value of grain merchandised, in lieu of net margins from grain merchandised, in the "Net sales and other operating income" category. The "Gross profit" category is unchanged as costs related to the grain merchandised are now reported in the "Cost of products sold" category. Prior year amounts have been reclassified to conform to this change.
Per Share Data
Share and per share information has been adjusted to give effect to all stock dividends, including the 5% stock dividend declared in August 2001 and payable in September 2001. Basic earnings per common share is determined by dividing net earnings by the weighted average number of common shares outstanding. In computing diluted earnings per share, the weighted average number of common shares outstanding is increased by common stock options outstanding with exercise prices lower than the average market prices of common shares during each year. The number of common stock options outstanding excluded from the diluted earnings per share computation is not material.
New Accounting Standards
Effective July 1, 2000, the Company adopted Statement of Financial Accounting Standards Number 133 (SFAS 133) "Accounting for Derivative Instruments and Hedging Activities". SFAS 133 establishes standards for recognition and measurement of derivatives and hedging activities. As a result of this adoption, the Company recorded in the first quarter of fiscal 2001 the cumulative effect of change in accounting principle to other comprehensive income (loss) of $(32 million), net of a $19 million tax benefit, for derivatives which hedge the variable cash flows of certain forecasted transactions. The fair value of these derivative instruments was previously classified in inventory.
Effective July 1, 2000, the Company adopted Staff Accounting Bulletin Number 101 (SAB 101) "Revenue Recognition in Financial Statements". SAB 101 provides specific guidance on recognition, presentation and disclosure of revenue in financial statements. The effect of the adoption of SAB 101 did not have a material impact on the Company's financial statements.
In July 2001, the Financial Accounting Standards Board issued Statements of Financial Accounting Standards Number 141 (SFAS 141) "Business Combinations" and Number 142 (SFAS 142) "Goodwill and Other Intangible Assets", effective for fiscal years beginning after December 15, 2001. Under the new standards, goodwill and intangible assets deemed to have indefinite lives will no longer be amortized but will be subject to annual impairment tests in accordance with the Statements. Other intangible assets will continue to be amortized over their useful lives. The Company will apply the new standards on accounting for goodwill and other intangible assets beginning in the first quarter of fiscal 2003. During fiscal 2002, the Company will perform the first of the required impairment tests of goodwill and indefinite-lived intangible assets and has not yet determined the impact of adopting these standards.
Reclassifications
Certain items in prior year financial statements have been reclassified to conform to the current year's presentation.
CONSOLIDATED STATEMENTS OF EARNINGS
Archer Daniels Midland Company
|
Year Ended June 30 |
||||||||||||
|
2001 |
|
2000 |
|
1999 |
||||||||
|
(In thousands, except per share amounts) |
||||||||||||
|
Net sales and other operating income |
$20,051,421 |
$18,612,423 |
$18,509,903 |
|||||||||
|
Cost of products sold |
18,619,623 |
17,392,848 |
17,277,874 |
|||||||||
|
Gross Profit |
1,431,798 |
1,219,575 |
1,232,029 |
|||||||||
|
Selling, general and administrative expenses |
731,029 |
729,358 |
701,075 |
|||||||||
|
Earnings From Operations |
700,769 |
490,217 |
530,954 |
|||||||||
|
Other expense - net |
178,870 |
136,980 |
111,121 |
|||||||||
|
Earnings Before Income Taxes and Extraordinary Loss |
521,899 |
353,237 |
419,833 |
|||||||||
|
Income taxes |
138,615 |
52,334 |
138,545 |
|||||||||
|
Earnings Before Extraordinary Loss |
383,284 |
300,903 |
281,288 |
|||||||||
|
Extraordinary loss, net of tax, on debt repurchase |
- |
- |
15,324 |
|||||||||
|
Net Earnings |
$383,284 |
$300,903 |
$265,964 |
|||||||||
|
Basic and diluted earnings per common share |
||||||||||||
|
Before extraordinary loss |
$0.58 |
$0.45 |
$0.41 |
|||||||||
|
Extraordinary loss on debt repurchase |
- |
- |
.02 |
|||||||||
|
After extraordinary loss |
$0.58 |
$0.45 |
$0.39 |
|||||||||
|
Average number of shares outstanding |
664,507 |
669,279 |
685,328 |
|||||||||
|
See notes to consolidated financial statements. |
||||||||||||
CONSOLIDATED BALANCE SHEETS
Archer Daniels Midland Company
|
June 30 |
||||||||
|
ASSETS |
2001 |
2000 |
||||||
|
(In thousands) |
||||||||
|
Current Assets |
||||||||
|
Cash and cash equivalents |
$ 676,086 |
$ 477,226 |
||||||
|
Marketable securities |
141,672 |
454,223 |
||||||
|
Receivables |
2,416,432 |
2,222,904 |
||||||
|
Inventories |
2,631,885 |
2,822,712 |
||||||
|
Prepaid expenses |
284,226 |
234,138 |
||||||
|
Total Current Assets |
6,150,301 |
6,211,203 |
||||||
|
Investments and Other Assets |
||||||||
|
Investments in and advances to affiliates |
2,052,222 |
1,876,633 |
||||||
|
Long-term marketable securities |
698,629 |
617,633 |
||||||
|
Other assets |
518,354 |
489,386 |
||||||
|
3,269,205 |
2,983,652 |
|||||||
|
Property, Plant and Equipment |
||||||||
|
Land |
155,236 |
163,722 |
||||||
|
Buildings |
2,067,654 |
2,098,124 |
||||||
|
Machinery and equipment |
8,752,507 |
8,702,639 |
||||||
|
Construction in progress |
411,150 |
416,546 |
||||||
|
Allowances for depreciation |
(6,466,122) |
(6,103,950) |
||||||
|
4,920,425 |
5,277,081 |
|||||||
|
$14,339,931 |
$14,471,936 |
|||||||
CONSOLIDATED BALANCE SHEETS
Archer Daniels Midland Company
|
June 30 |
||||||||
|
Liabilities and Shareholders' Equity |
2001 |
|
2000 |
|||||
|
(In thousands) |
||||||||
|
Current Liabilities |
||||||||
|
Short-term debt |
$ 875,703 |
$ 1,550,571 |
||||||
|
Accounts payable |
1,794,684 |
2,188,580 |
||||||
|
Accrued expenses |
814,450 |
610,735 |
||||||
|
Current maturities of long-term debt |
382,144 |
31,895 |
||||||
|
|
|
|||||||
|
Total Current Liabilities |
3,866,981 |
4,381,781 |
||||||
|
Long-Term Debt |
3,351,067 |
3,277,218 |
||||||
|
Deferred Liabilities |
||||||||
|
Income taxes |
644,295 |
560,772 |
||||||
|
Other |
145,905 |
141,922 |
||||||
|
|
|
|||||||
|
790,200 |
702,694 |
|||||||
|
Shareholders' Equity |
||||||||
|
Common stock |
5,608,741 |
5,232,597 |
||||||
|
Reinvested earnings |
1,187,357 |
1,325,323 |
||||||
|
Accumulated other comprehensive loss |
(464,415) |
(447,677 |
) |
|||||
|
|
|
|||||||
|
6,331,683 |
6,110,243 |
|||||||
|
|
|
|||||||
|
$14,339,931 |
$14,471,936 |
|||||||
|
|
|
|||||||
|
See notes to consolidated financial statements. |
||||||||
CONSOLIDATED STATEMENTS OF CASH FLOWS
Archer Daniels Midland Company
|
Year Ended June 30 |
|||||||
|
2001 |
|
2000 |
|
1999 |
|||
|
(In thousands) |
|||||||
|
Operating Activities |
|||||||
|
Net earnings |
$ 383,284 |
$ 300,903 |
$ 265,964 |
||||
|
Adjustments to reconcile to net cash provided by operations |
|||||||
|
Depreciation and amortization |
572,390 |
604,229 |
584,965 |
||||
|
Plant shut downs and abandonments |
- |
108,477 |
- |
||||
|
Deferred income taxes |
3,919 |
(23,812) |
49,676 |
||||
|
Amortization of long-term debt discount |
49,584 |
43,410 |
37,216 |
||||
|
(Gain) loss on marketable securities transactions |
56,160 |
(10,166) |
(101,780) |
||||
|
Stock contributed to employee benefit plans |
40,425 |
61,721 |
56,054 |
||||
|
Extraordinary loss on debt repurchase |
- |
- |
15,324 |
||||
|
Other - net |
(24,332) |
(5,721) |
51,186 |
||||
|
Changes in operating assets and liabilities |
|||||||
|
Receivables |
(72,015) |
(361,391) |
56,946 |
||||
|
Inventories |
229,289 |
(126,250) |
(79,811) |
||||
|
Prepaid expenses |
1,557 |
(3,338) |
(63,294) |
||||
|
Accounts payable and accrued expenses |
(376,082) |
239,907 |
359,185 |
||||
|
Total Operating Activities |
864,179 |
827,969 |
1,231,631 |
||||
|
Investing Activities |
|||||||
|
Purchases of property, plant and equipment |
(273,168) |
(428,737) |
(671,471) |
||||
|
Net assets of businesses acquired |
(124,639) |
(30,422) |
(136,021) |
||||
|
Investments in and advances to affiliates, net |
(147,735) |
(362,072) |
(117,371) |
||||
|
Purchases of marketable securities |
(460,195) |
(1,101,100) |
(635,562) |
||||
|
Proceeds from sales of marketable securities |
838,859 |
912,923 |
1,139,466 |
||||
|
Other - net |
(23,528) |
(63,019) |
(1,542) |
||||
|
Total Investing Activities |
(190,406) |
(1,072,427) |
(422,501) |
||||
|
Financing Activities |
|||||||
|
Long-term debt borrowings |
429,124 |
108,895 |
383,735 |
||||
|
Long-term debt payments |
(41,702) |
(54,609) |
(88,785) |
||||
|
Net borrowings (payments) under lines of credit agreements |
(674,350) |
316,932 |
(338,109) |
||||
|
Purchases of treasury stock |
(62,932) |
(210,911) |
(313,829) |
||||
|
Cash dividends |
(125,053) |
(120,001) |
(117,089) |
||||
|
Total Financing Activities |
(474,913) |
40,306 |
(474,077) |
||||
|
Increase (Decrease) In Cash And Cash Equivalents |
198,860 |
(204,152) |
335,053 |
||||
|
Cash And Cash Equivalents Beginning Of Year |
477,226 |
681,378 |
346,325 |
||||
|
Cash And Cash Equivalents End Of Year |
$ 676,086 |
$ 477,226 |
$ 681,378 |
||||
|
Supplemental Cash Flow Information |
|||||||
|
Noncash Investing and Financing Activities |
|||||||
|
Common stock issued for acquisitions and investments |
$425 |
$24,150 |
$ - |
||||
|
See notes to consolidated financial statements. |
|||||||
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
Archer Daniels Midland Company
|
Common Stock |
|
|
Other |
Total |
||||||||
|
Reinvested |
Comprehensive |
Shareholders' |
||||||||||
|
Shares |
|
Amount |
|
Earnings |
|
|
Loss |
|
Equity |
|||
|
(In thousands) |
||||||||||||
|
Balance July 1, 1998 |
599,221 |
$4,936,649 |
$ 1,662,563 |
$ (94,300) |
$ 6,504,912 |
|||||||
|
Comprehensive income |
||||||||||||
|
Net earnings |
265,964 |
|||||||||||
|
Other comprehensive loss |
(165,701) |
|||||||||||
|
Total comprehensive income |
100,263 |
|||||||||||
|
Cash dividends paid-$.17 per share |
(117,089) |
(117,089) |
||||||||||
|
5% stock dividend |
29,180 |
391,889 |
(391,889) |
|||||||||
|
Treasury stock purchases |
(19,867) |
(313,829) |
(313,829) |
|||||||||
|
Other |
4,261 |
66,611 |
(228) |
|
66,383 |
|||||||
|
Balance June 30, 1999 |
612,795 |
5,081,320 |
1,419,321 |
(260,001) |
6,240,640 |
|||||||
|
Comprehensive income |
||||||||||||
|
Net earnings |
300,903 |
|||||||||||
|
Other Comprehensive loss |
(187,676) |
|||||||||||
|
Total comprehensive income |
113,227 |
|||||||||||
|
Cash dividends paid-$.18 per share |
(120,001) |
(120,001) |
||||||||||
|
5% stock dividend |
30,109 |
274,473 |
(274,473) |
|||||||||
|
Treasury stock purchases |
(17,711) |
(210,911) |
(210,911) |
|||||||||
|
Other |
7,103 |
87,715 |
(427) |
|
87,288 |
|||||||
|
Balance June 30, 2000 |
632,296 |
5,232,597 |
1,325,323 |
(447,677) |
6,110,243 |
|||||||
|
Comprehensive income |
||||||||||||
|
Net earnings |
383,284 |
|||||||||||
|
Other Comprehensive loss |
(16,738) |
|||||||||||
|
Total comprehensive income |
366,546 |
|||||||||||
|
Cash dividends paid-$.19 per share |
(125,053) |
(125,053) |
||||||||||
|
5% stock dividend |
31,542 |
395,923 |
(395,923) |
|||||||||
|
Treasury stock purchases |
(5,525) |
(62,932) |
(62,932) |
|||||||||
|
Other |
4,065 |
43,153 |
(274) |
|
42,879 |
|||||||
|
Balance June 30, 2001 |
662,378 |
$5,608,741 |
$1,187,357 |
$(464,415) |
$6,331,683 |
|||||||
|
See notes to consolidated financial statements. |
Notes to Consolidated Financial Statements
Archer Daniels Midland Company
Note 1-Accumulated Other Comprehensive Loss
The following table sets forth information with respect to accumulated other comprehensive income (loss):
|
Foreign |
Deferred |
Minimum |
Unrealized |
Accumulated |
||||||
|
Currency |
Gain (Loss) |
Pension |
Gain (Loss) |
Other |
||||||
|
Translation |
on Hedging |
Liability |
on |
Comprehensive |
||||||
|
Adjustment |
Activities |
Adjustment |
Investments |
Income (Loss) |
||||||
|
(In thousands) |
||||||||||
|
Balance at July 1, 1998 |
$ (215,985) |
$ 121,685 |
$ (94,300) |
|||||||
|
Unrealized gains (losses) |
(83,842) |
(245,386) |
(329,228) |
|||||||
|
Amounts reclassified to net earnings |
100,591 |
100,591 |
||||||||
|
Tax effect |
|
|
|
62,936 |
62,936 |
|||||
|
Net of tax amount |
(83,842) |
(81,859) |
(165,701) |
|||||||
|
Balance at June 30, 1999 |
(299,827) |
39,826 |
(260,001) |
|||||||
|
Unrealized gains (losses) |
(97,030) |
(131,153) |
(228,183) |
|||||||
|
Amounts reclassified to net earnings |
5,288 |
5,288 |
||||||||
|
Tax effect |
|
|
|
35,219 |
35,219 |
|||||
|
Net of tax amount |
(97,030) |
(90,646) |
(187,676) |
|||||||
|
Balance at June 30, 2000 |
(396,857) |
(50,820) |
(447,677) |
|||||||
|
Adoption of SFAS 133 - net of tax |
$ (32,076) |
(32,076) |
||||||||
|
Unrealized gains (losses) |
(101,991) |
(35,648) |
$ (22,424) |
251,887 |
91,824 |
|||||
|
Amounts reclassified to net earnings |
51,672 |
(50,982) |
690 |
|||||||
|
Tax effect |
|
(6,076) |
8,504 |
(79,604) |
(77,176) |
|||||
|
Net of tax amount |
(101,991) |
(22,128) |
(13,920) |
121,301 |
(16,738) |
|||||
|
Balance at June 30, 2001 |
$ (498,848) |
$ (22,128) |
$ (13,920) |
$ 70,481 |
$ (464,415) |
Notes to Consolidated Financial Statements
Archer Daniels Midland Company
Note 2-Marketable Securities and Cash Equivalents
|
Unrealized |
Unrealized |
||||||||
|
Cost |
Gains |
Losses |
Fair Value |
||||||
|
2001 |
(In thousands) |
||||||||
|
United States Government obligations |
|||||||||
|
Maturity less than 1 year |
$364,576 |
$978 |
$430 |
$365,124 |
|||||
|
Other debt securities |
|||||||||
|
Maturity less than 1 year |
227,541 |
501 |
- |
228,042 |
|||||
|
Equity securities |
586,928 |
125,856 |
14,155 |
698,629 |
|||||
|
$1,179,045 |
$127,335 |
$14,585 |
$1,291,795 |
||||||
|
Unrealized |
Unrealized |
||||||||
|
Cost |
Gains |
Losses |
Fair Value |
||||||
|
2000 |
(In thousands) |
||||||||
|
United States Government obligations |
|||||||||
|
Maturity less than 1 year |
$499,509 |
$489 |
$467 |
$499,531 |
|||||
|
Maturity 1 year to 5 years |
39,788 |
74 |
- |
39,862 |
|||||
|
Other debt securities |
|||||||||
|
Maturity less than 1 year |
173,454 |
700 |
1 |
174,153 |
|||||
|
Equity securities |
665,095 |
60,192 |
149,142 |
576,145 |
|||||
|
$1,377,846 |
$61,455 |
$149,610 |
$1,289,691 |
||||||
Notes to Consolidated Financial Statements
Archer Daniels Midland Company
Note 3-Inventories and Derivatives
To reduce price risk caused by market fluctuations, the Company generally follows a policy of using exchange-traded futures contracts to minimize its net position of merchandisable agricultural commodity inventories and forward cash purchase and sales contracts. Inventories of merchandisable agricultural commodities, which include amounts acquired under deferred pricing contracts, are stated at market value. Exchange-traded futures contracts, forward cash purchase contracts and forward cash sales contracts, which have not been designated as fair value hedges, are valued at market price. Changes in the market value of inventories of merchandisable agricultural commodities, forward cash purchase and sales contracts and exchange-traded futures contracts are recognized in earnings immediately, resulting in cost of goods sold approximating FIFO cost. Unrealized gains on forward cash purchase contracts, forward cash sales contracts and exchange-traded futures contracts represent the fair value of such instruments and are classified on the Company's balance sheet as receivables. Unrealized losses on forward cash purchase contracts, forward cash sales contracts and exchange-traded futures contracts represent the fair value of such instruments and are classified on the Company's balance sheet as accounts payable.
In addition, the Company from time to time enters into futures contracts which are designated as hedges of specific volumes of commodities that will be purchased and processed in a future month. These readily marketable exchange-traded futures contracts are designated as cash flow hedges. The changes in the market value of such futures contracts has historically been, and is expected to continue to be, highly effective at offsetting changes in price movements of the hedged item. The amounts representing the ineffectiveness of these cash flow hedges are immaterial. Gains and losses arising from open and closed hedging transactions are deferred in other comprehensive income, net of applicable income taxes, and recognized in the statement of earnings when the finished goods produced from the hedged item are sold. The gains and losses arising from these cash flow hedges will be recognized in the statement of earnings within the next 12 months.
The Company also values certain inventories using the lower of cost, determined by either the last-in, first out (LIFO) or first-in first out (FIFO) method, or market. At June 30, 2001 and 2000, LIFO inventories were valued at market.
|
|
2001 |
|
2000 |
|
|
|
(In thousands) |
|
||
|
Market inventories |
$ 1,427,100 |
|
$ 1,369,432 |
|
|
FIFO inventories |
837,520 |
|
1,032,456 |
|
|
LIFO inventories |
367,265 |
|
420,824 |
|
|
|
$ 2,631,885 |
|
$ 2,822,712 |
|
|
|
|
|
|
|
Notes to Consolidated Financial Statements
Archer Daniels Midland Company
Note 4-Investments In and Advances to Affiliates
The Company has 99 unconsolidated affiliates located in North and South America, Africa, Europe and Asia, accounted for under the equity method. The following table summarizes the balance sheets as of June 30, 2001 and 2000, and the statements of earnings for each of the three years ended June 30, 2001 of the Company's unconsolidated affiliates:
|
2001 |
2000 |
1999 |
|||||
|
(In thousands) |
|||||||
|
Current assets |
$3,942,532 |
$3,894,202 |
|||||
|
Non-current assets |
8,055,513 |
7,571,209 |
|||||
|
Current liabilities |
2,410,587 |
2,286,132 |
|||||
|
Non-current liabilities |
1,936,852 |
1,910,057 |
|||||
|
Minority interests |
280,789 |
265,937 |
|||||
|
Net sales |
16,447,274 |
15,009,536 |
$14,605,815 |
||||
|
Gross profit |
1,550,299 |
1,211,868 |
1,124,363 |
||||
|
Net income (loss) |
137,299 |
725,759 |
(2,630) |
||||
The Company's investment in unconsolidated affiliates exceeds the underlying equity in net assets by $95 million, which amount is being amortized on a straight-line basis over 10 to 40 years.
Three foreign affiliates for which the Company has a carrying value of $372 million have a market value of $128 million based on quoted market prices and exchange rates at June 30, 2001.
Notes to Consolidated Financial Statements
Archer Daniels Midland Company
Note 5-Debt and Financing Arrangements
|
2001 |
|
2000 |
||||||
|
(In thousands) |
||||||||
|
7.0% Debentures $400 million |
||||||||
|
face amount, due in 2031 |
$397,191 |
$ - |
||||||
|
Zero Coupon Debt $400 million |
||||||||
|
face amount, due in 2002 |
358,079 |
313,344 |
||||||
|
7.5% Debentures $350 million |
||||||||
|
face amount, due in 2027 |
347,952 |
347,926 |
||||||
|
8.875% Debentures $300 million |
||||||||
|
face amount, due in 2011 |
298,629 |
298,545 |
||||||
|
6.625% Debentures $300 million |
||||||||
|
face amount, due in 2029 |
298,596 |
298,579 |
||||||
|
8.125% Debentures $300 million |
||||||||
|
face amount, due in 2012 |
298,394 |
298,305 |
||||||
|
8.375% Debentures $300 million |
||||||||
|
face amount, due in 2017 |
294,820 |
294,669 |
||||||
|
6.25% Notes $250 million |
||||||||
|
face amount, due in 2003 |
249,693 |
249,600 |
||||||
|
7.125% Debentures $250 million |
||||||||
|
face amount, due in 2013 |
249,511 |
249,485 |
||||||
|
6.95% Debentures $250 million |
||||||||
|
face amount, due in 2097 |
246,154 |
246,124 |
||||||
|
6.75% Debentures $200 million |
||||||||
|
face amount, due in 2027 |
195,782 |
195,676 |
||||||
|
5.87% Debentures $196 million |
||||||||
|
face amount, due in 2010 |
113,150 |
109,074 |
||||||
|
Other |
385,260 |
407,786 |
||||||
|
Total long-term debt |
3,733,211 |
3,309,113 |
||||||
|
Current maturities |
(382,144) |
(31,895) |
||||||
|
$3,351,067 |
$3,277,218 |
|||||||
At June 30, 2001, the fair value of the Company's long-term debt exceeded the carrying value by $202 million, as estimated by using quoted market prices or discounted future cash flows based on the Company's current incremental borrowing rates for similar types of borrowing arrangements.
Unamortized original issue discount on the Zero Coupon Debt is being amortized at 13.80%. Accelerated amortization of the discount for tax purposes has the effect of lowering the actual rate of interest to be paid over the remaining life of the issue to approximately 4.82%.
The aggregate maturities of long-term debt for the five years after June 30, 2001 are $382 million, $272 million, $44 million, $112 million, and $119 million, respectively.
At June 30, 2001, the Company had lines of credit totaling $2.1 billion, of which $1.2 billion was unused. The weighted average interest rates on short-term borrowings outstanding at June 30, 2001 and 2000 were 4.31% and 6.57%, respectively.
Notes to Consolidated Financial Statements
Archer Daniels Midland Company
Note 6-Shareholders' Equity
The Company has authorized 800 million shares of common stock and 500,000 shares of preferred stock, both without par value. No preferred stock has been issued. At June 30, 2001 and 2000, the Company had approximately 9.6 million and 19.7 million common shares, respectively, in treasury. Treasury stock is recorded at cost, $92 million at June 30, 2001 and $210 million at June 30, 2000, as a reduction of common stock.
Stock option plans provide for the granting of options to employees to purchase common stock of the Company at market value on the date of grant. Options expire five to ten years after the date of grant. At June 30, 2001, there were 8.5 million shares available for future grant. Stock option activity during the years indicated is as follows:
|
Weighted Average |
|||||
|
Number of |
Exercise Price |
||||
|
Shares |
Per Share |
||||
|
(In thousands) |
|||||
|
Shares under option at June 30, 1998 |
4,630 |
$12.01 |
|||
|
Granted |
2,519 |
13.54 |
|||
|
Exercised |
(1,351) |
10.47 |
|||
|
Cancelled |
(227) |
11.07 |
|||
|
Shares under option at June 30, 1999 |
5,571 |
13.12 |
|||
|
Granted |
6,084 |
10.21 |
|||
|
Exercised |
(5) |
11.84 |
|||
|
Cancelled |
(685) |
12.21 |
|||
|
Shares under option at June 30, 2000 |
10,965 |
11.56 |
|||
|
Granted |
41 |
10.94 |
|||
|
Exercised |
(34) |
9.27 |
|||
|
Cancelled |
(392) |
12.23 |
|||
|
Shares under option at June 30, 2001 |
10,580 |
$11.54 |
|||
|
Shares exercisable at June 30, 2001 |
3,311 |
$12.35 |
|||
|
Shares exercisable at June 30, 2000 |
1,885 |
$13.07 |
|||
|
Shares exercisable at June 30, 1999 |
1,512 |
$12.49 |
|||
At June 30, 2001, the range of exercise prices and weighted average remaining contractual life of outstanding options was $8.33 to $18.59 and five years, respectively.
The Company accounts for its stock option plans in accordance with Accounting Principles Board Opinion Number 25 (APB 25) "Accounting for Stock Issued to Employees." Under APB 25, compensation expense is recognized if the exercise price of the employee stock option is less than the market price on the grant date. Statement of Financial Accounting Standards Number 123 "Accounting for Stock-Based Compensation" requires the fair value of options granted and the pro forma impact on earnings and earnings per share be disclosed when material. Had compensation expense for stock options been determined based on the fair value of options granted, the Company's 2001, 2000 and 1999 net earnings and earnings per share would have been impacted less than one percent.
The weighted average fair value of options granted during 2001, 2000 and 1999 are $3.79, $3.20 and $4.62, respectively. The fair value of each option grant is estimated as of the date of grant using the Black-Scholes single option pricing model for pro forma footnote purposes. Expected dividend yield was assumed to be 1% in 2001, 2% in 2000 and 1% in 1999. An expected risk-free interest rate of 7% was assumed in 2001, 8% in 2000 and 6% in 1999. Expected volatility was assumed to be 40% in 2001 and 30% in 2000 and 1999. Expected option life was assumed to be four years in 2001, six years in 2000 and five years in 1999.
Notes to Consolidated Financial Statements
Archer Daniels Midland Company
Note 7-Other Expense - Net
|
2001 |
|
2000 |
|
1999 |
|||
|
(In thousands) |
|||||||
|
Investment income |
$ 149,401 |
$ 136,317 |
$ 118,720 |
||||
|
Interest expense |
(398,131) |
(377,404) |
(326,207) |
||||
|
Net gain (loss) on marketable |
|||||||
|
securities transactions |
(56,311) |
10,103 |
101,319 |
||||
|
Equity in earnings (losses) |
|||||||
|
of affiliates |
104,909 |
88,206 |
(4,273) |
||||
|
Other - net |
21,262 |
5,798 |
(680) |
||||
|
$ (178,870) |
$ (136,980) |
$(111,121) |
|||||
Interest expense is net of interest capitalized of $16 million, $23 million and $26 million in 2001, 2000 and 1999, respectively.
The Company made interest payments of $348 million, $366 million and $299 million in 2001, 2000, and 1999, respectively.
Realized gains on sales of available-for-sale marketable securities totaled $3 million, $17 million and $102 million in 2001, 2000 and 1999, respectively. Realized losses totaled $59 million, $7 million and $1 million in 2001, 2000 and 1999, respectively.
Notes to Consolidated Financial Statements
Archer Daniels Midland Company
Note 8-Income Taxes
|
For financial reporting purposes, earnings before income taxes and extraordinary loss |
|||||||||
|
include the following components: |
|||||||||
|
2001 |
|
2000 |
|
1999 |
|||||
|
(In thousands) |
|||||||||
|
United States |
$ 242,772 |
$ 211,159 |
$ 327,489 |
||||||
|
Foreign |
279,127 |
142,078 |
92,344 |
||||||
|
$ 521,899 |
$ 353,237 |
$ 419,833 |
|||||||
|
Significant components of income taxes are as follows: |
|||||||||
|
2001 |
|
2000 |
|
1999 |
|||||
|
(In thousands) |
|||||||||
|
Current |
|||||||||
|
Federal |
$ 48,578 |
$ 36,624 |
$ 74,040 |
||||||
|
State |
7,890 |
22,099 |
12,787 |
||||||
|
Foreign |
64,009 |
30,480 |
27,968 |
||||||
|
Deferred |
|||||||||
|
Federal |
15,122 |
(33,025) |
25,085 |
||||||
|
State |
4,599 |
(7,693) |
674 |
||||||
|
Foreign |
(1,583) |
3,849 |
(2,009) |
||||||
|
$ 138,615 |
$ 52,334 |
$ 138,545 |
|||||||
|
Significant components of the Company's deferred tax liabilities |
|||||||||
|
and assets are as follows: |
|||||||||
|
2001 |
|
2000 |
|||||||
|
(In thousands |
|||||||||
|
Deferred tax liabilities |
|||||||||
|
Depreciation |
$ 529,818 |
$ 514,822 |
|||||||
|
Bond discount amortization |
41,669 |
49,733 |
|||||||
|
Unrealized gain on marketable securities |
42,269 |
- |
|||||||
|
Other |
102,497 |
|
104,524 |
||||||
|
716,253 |
669,079 |
||||||||
|
Deferred tax assets |
|||||||||
|
Unrealized loss on marketable securities |
- |
37,336 |
|||||||
|
Postretirement benefits |
37,685 |
35,103 |
|||||||
|
Other |
152,387 |
|
141,812 |
||||||
|
190,072 |
|
214,251 |
|||||||
|
Net deferred tax liabilities |
526,181 |
454,828 |
|||||||
|
Current net deferred tax assets included |
|||||||||
|
in prepaid expenses |
118,114 |
|
105,944 |
||||||
|
Non-current net deferred tax liabilities |
$ 644,295 |
|
$ 560,772 |
||||||
|
Reconciliation of the statutory federal income tax rate to the Company's effective tax rate |
|||||||||
|
on earnings before extraordinary loss is as follows: |
|||||||||
|
2001 |
|
2000 |
|
1999 |
|
||||
|
Statutory rate |
35.0% |
35.0% |
35.0% |
||||||
|
Prior years tax redetermination |
- |
(17.0) |
- |
||||||
|
Foreign sales corporation |
(4.9) |
(6.3) |
(4.5) |
||||||
|
State income taxes, net of |
|||||||||
|
federal tax benefit |
1.6 |
2.7 |
2.2 |
||||||
|
Foreign gain permanently reinvested |
(6.4) |
- |
- |
||||||
|
Foreign earnings taxed at rates |
|||||||||
|
other than the U.S. statutory rate |
(2.0) |
(0.3) |
(1.8) |
||||||
|
Other |
3.3 |
|
0.7 |
|
2.1 |
|
|||
|
Effective rate |
26.6% |
14.8% |
33.0% |
||||||
The Company made income tax payments of $104 million, $89 million, and $111 million in 2001, 2000, and 1999 respectively.
During the fourth quarter of 2000, the Company recognized a reduction in income tax related to a redetermination of foreign sales corporation benefits for prior years and the resolution of various other tax issues. This resulted in a $60 million credit, or $.09 per share, to the 2000 provision.
Undistributed earnings of the Company's foreign subsidiaries and affiliated corporate joint venture companies accounted for on the equity method amounting to approximately $706 million at June 30, 2001, are considered to be permanently reinvested and, accordingly, no provision for U.S. income taxes has been provided thereon. It is not practicable to determine the deferred tax liability for temporary differences related to these undistributed earnings.
Notes to Consolidated Financial Statements
Archer Daniels Midland Company
Note 9-Leases
The Company leases manufacturing and warehouse facilities, real estate, transportation and other equipment under operating leases which expire at various dates through the year 2076. Rent expense for 2001, 2000 and 1999 was $81 million, $89 million and $86 million, respectively. Future minimum rental payments for non-cancelable operating leases with initial or remaining terms in excess of one year are as follows:
|
Fiscal years |
(In thousands) |
|||
|
2002 |
$37,283 |
|||
|
2003 |
30,867 |
|||
|
2004 |
23,750 |
|||
|
2005 |
19,429 |
|||
|
2006 |
16,418 |
|||
|
Thereafter |
65,334 |
|||
|
Total minimum lease payments |
$193,081 |
|||
Notes to Consolidated Financial Statements
Archer Daniels Midland Company
Note 10-Employee Benefit Plans
The Company provides substantially all employees with pension benefits. The Company also provides substantially all domestic employees with postretirement health care and life insurance benefits. It is the Company's policy to fund pension costs as required by applicable laws and regulations. In addition, the Company has savings and investment plans available to eligible employees with at least one year of service. The Company also maintains Stock Ownership Plans for qualifying employees. The Company contributes shares of its stock to the plans to match qualifying employee contributions. Expense is measured and recorded based upon the fair market value of the stock contributed to the plans each month. The expense recorded in each period presented related to the Stock Ownership Plans is disclosed as "retirement plan expense for defined contribution plans." The number of shares designated for use in the plans is not significant compared to the shares outstanding for the periods presented. Total retirement plan expense includes the following components:
|
Pension Benefits |
Postretirement Benefits |
|||||||||||||||||||||||
|
2001 |
2000 |
1999 |
2001 |
2000 |
1999 |
|||||||||||||||||||
|
(In thousands) |
(In thousands) |
|||||||||||||||||||||||
|
Defined benefit plans |
||||||||||||||||||||||||
|
Service cost (benefits earned during the period) |
$ 29,120 |
$ 31,084 |
$ 23,239 |
$ 5,892 |
$ 5,546 |
$ 4,355 |
||||||||||||||||||
|
Interest cost |
50,163 |
47,818 |
37,903 |
6,922 |
5,693 |
4,284 |
||||||||||||||||||
|
Expected return on plan assets |
(54,625) |
(50,910) |
(43,844) |
- |
- |
- |
||||||||||||||||||
|
Actuarial loss (gain) |
407 |
891 |
969 |
(12) |
(265) |
(769) |
||||||||||||||||||
|
Net amortization |
1,160 |
1,071 |
40 |
165 |
165 |
(111) |
||||||||||||||||||
|
Net periodic pension expense |
26,225 |
29,954 |
18,307 |
12,967 |
11,139 |
7,759 |
||||||||||||||||||
|
Defined contribution plans |
19,114 |
18,455 |
17,775 |
- |
- |
- |
||||||||||||||||||
|
Total retirement plan expense |
$ 45,339 |
$ 48,409 |
$ 36,082 |
$ 12,967 |
$ 11,139 |
$ 7,759 |
||||||||||||||||||
|
The following tables set forth changes in the benefit obligation and the fair value of plan assets: |
||||||||||||||||||||||||
|
Pension Benefits |
Postretirement Benefits |
|||||||||||||||||||||||
|
2001 |
2000 |
2001 |
2000 |
|||||||||||||||||||||
|
(In thousands) |
(In Thousands) |
|||||||||||||||||||||||
|
Benefit obligation, beginning |
$ 712,016 |
$ 696,658 |
$ 92,305 |
$ 81,330 |
||||||||||||||||||||
|
Service cost |
29,120 |
31,084 |
5,892 |
5,546 |
||||||||||||||||||||
|
Interest cost |
50,163 |
47,818 |
6,922 |
5,693 |
||||||||||||||||||||
|
Actuarial loss (gain) |
39,213 |
(25,443) |
4,036 |
4,237 |
||||||||||||||||||||
|
Benefits paid |
(34,644) |
(32,461) |
(5,573) |
(4,500) |
||||||||||||||||||||
|
Plan amendments |
3,689 |
1,822 |
4,882 |
- |
||||||||||||||||||||
|
Acquisitions |
- |
2,472 |
- |
- |
||||||||||||||||||||
|
Foreign currency effects |
(15,688) |
(9,934) |
(5) |
(1) |
||||||||||||||||||||
|
Benefit obligation, ending |
$ 783,869 |
$ 712,016 |
$ 108,459 |
$ 92,305 |
||||||||||||||||||||
|
Fair value of plan assets, beginning |
$ 656,744 |
$ 615,977 |
$ - |
$ - |
||||||||||||||||||||
|
Actual return on plan assets |
(8,750) |
52,000 |
- |
- |
||||||||||||||||||||
|
Employer contributions |
26,992 |
29,762 |
5,573 |
4,500 |
||||||||||||||||||||
|
Benefits paid |
(34,644) |
(32,461) |
(5,573) |
(4,500) |
||||||||||||||||||||
|
Acquisitions |
- |
6,031 |
- |
- |
||||||||||||||||||||
|
Foreign currency effects |
(21,810) |
(14,565) |
- |
- |
||||||||||||||||||||
|
Fair value of plan assets, ending |
$ 618,532 |
$ 656,744 |
$ - |
$ - |
||||||||||||||||||||
|
Funded status |
$ (165,337) |
$ (55,272) |
$ (108,459) |
$ (92,305) |
||||||||||||||||||||
|
Unamortized transition amount |
(9,915) |
(17,090) |
- |
- |
||||||||||||||||||||
|
Unrecognized net loss (gain) |
122,812 |
25,537 |
(5,419) |
(9,468) |
||||||||||||||||||||
|
Unrecognized prior service costs |
44,952 |
44,575 |
9,330 |
4,613 |
||||||||||||||||||||
|
Adjustment for fourth quarter contributions |
3,440 |
3,846 |
- |
- |
||||||||||||||||||||
|
Pension asset (liability) recognized in the balance sheet |
$ (4,048) |
$ 1,596 |
$ (104,548) |
$ (97,160) |
||||||||||||||||||||
|
Prepaid benefit cost |
$ 54,445 |
$ 54,337 |
$ - |
$ - |
||||||||||||||||||||
|
Accrued benefit liability |
(112,983) |
(75,019) |
(104,548) |
(97,160) |
||||||||||||||||||||
|
Intangible asset |
32,066 |
14,820 |
- |
- |
||||||||||||||||||||
|
Minimum pension liability |
22,424 |
7,458 |
- |
- |
||||||||||||||||||||
|
Net amount recognized, June 30 |
$ (4,048) |
$ 1,596 |
$ (104,548) |
$ (97,160) |
||||||||||||||||||||
|
The following table sets forth the principal assumptions used in developing the benefit obligation and the net periodic pension expense: |
||||||||||||||||||||||||
|
Pension Benefits |
Postretirement Benefits |
|||||||||||||||||||||||
|
2001 |
2000 |
2001 |
|
2000 |
||||||||||||||||||||
|
Discount rate |
7.0% |
7.1% |
7.3% |
7.5% |
||||||||||||||||||||
|
Expected return on plan assets |
8.3% |
8.3% |
N/A |
N/A |
||||||||||||||||||||
|
Rate of compensation increase |
4.3% |
4.2% |
N/A |
N/A |
||||||||||||||||||||
|
|
||||||||||||||||||||||||
The projected benefit obligation, accumulated benefit obligation and fair value of plan assets for the U.S. retirement plans with accumulated benefit obligations in excess of plan assets were $608 million, $514 million, and $402 million, respectively, as of June 30, 2001, and $539 million, $459 million, and $414 million, respectively, as of June 30, 2000.
For measurement purposes, a 6.9% annual rate of increase in the per capita cost of covered health care benefits was assumed for 2002. The rate was assumed to decrease gradually to 5.5% for 2004 and remain at that level thereafter.
Assumed health care cost trend rates have a significant impact on the amounts reported for the health care plans. A 1% change in assumed health care cost trend rates would have the following effect:
|
1% Increase |
1% Decrease |
|||||||||
|
(In thousands) |
||||||||||
|
Effect on total of service and interest cost components |
$ 1,261 |
$ (1,147) |
||||||||
|
Effect on accumulated postretirement benefit obligations |
$ 7,915 |
$ (7,376) |
||||||||
Notes to Consolidated Financial Statements
Archer Daniels Midland Company
Note 11-Segment and Geographic Information
The Company is principally engaged in the procuring, transporting, storing, processing and merchandising of agricultural commodities and products.
The Company's operations are classified into two reportable business segments: Oilseeds & Corn Processing and Agricultural Services. Each of these segments is organized based upon similar economic characteristics and is similar in the nature of products and services offered, the nature of production processes, the type or class of customer and distribution methods. The Company's remaining operations are included in the "Other" segment.
The Oilseeds & Corn Processing Segment processes oilseeds and corn, and sells the resulting processed products as food and feed ingredients and for industrial uses. The Agricultural Services Segment utilizes the Company's vast grain elevator and transportation network to buy, store, clean and transport agricultural commodities, such as oilseeds, corn, wheat, milo, oats and barley, and resells these commodities primarily as food or feed ingredients.
Intersegment sales have been recorded at amounts approximating market. Operating profit for each segment is based on net sales less identifiable operating expenses, including an interest charge related to working capital usage. Also included in operating profit are the related equity in earnings of affiliates based on the equity method of accounting. General corporate expenses, investment income, unallocated interest expense, marketable securities transactions and FIFO to LIFO inventory adjustments have been excluded from segment operations and classified as Corporate. All assets, other than cash, marketable securities and those assets related to the corporate office, have been identified with the segments to which they relate.
Segment Information
|
|
|
2001 |
|
2000 |
|
1999 |
|
|
|
(In thousands) |
||||
|
Sales to external customers |
||||||
|
Oilseeds & Corn Processing |
$ 10,463,748 |
$ 10,109,185 |
$ 10,727,430 |
|||
|
Agricultural Services |
5,644,237 |
4,640,187 |
3,574,497 |
|||
|
Other |
3,943,436 |
3,863,051 |
4,207,976 |
|||
|
Total |
|
$ 20,051,421 |
|
$ 18,612,423 |
|
$ 18,509,903 |
|
Intersegment sales |
||||||
|
Oilseeds & Corn Processing |
$ 234,855 |
$ 209,026 |
$ 217,166 |
|||
|
Agricultural Services |
1,623,476 |
1,503,492 |
1,496,811 |
|||
|
Other |
95,076 |
103,574 |
106,946 |
|||
|
Total |
|
$ 1,953,407 |
|
$ 1,816,092 |
|
$ 1,820,923 |
|
Net sales |
||||||
|
Oilseeds & Corn Processing |
$ 10,698,603 |
$ 10,318,211 |
$ 10,944,596 |
|||
|
Agricultural Services |
7,267,713 |
6,143,679 |
5,071,308 |
|||
|
Other |
4,038,512 |
3,966,625 |
4,314,922 |
|||
|
Intersegment Elimination |
(1,953,407) |
(1,816,092) |
(1,820,923) |
|||
|
Total |
|
$ 20,051,421 |
|
$ 18,612,423 |
|
$ 18,509,903 |
|
Interest expense |
||||||
|
Oilseeds & Corn Processing |
$ 96,627 |
$ 91,961 |
$ 85,740 |
|||
|
Agricultural Services |
44,214 |
38,880 |
27,954 |
|||
|
Other |
91,737 |
95,203 |
97,122 |
|||
|
Total |
|
$ 232,578 |
|
$ 226,044 |
|
$ 210,816 |
|
Depreciation and amortization |
||||||
|
Oilseeds & Corn Processing |
$ 279,807 |
$ 301,601 |
$ 306,035 |
|||
|
Agricultural Services |
71,445 |
67,636 |
62,960 |
|||
|
Other |
198,715 |
214,299 |
196,670 |
|||
|
Total |
|
$ 549,967 |
|
$ 583,536 |
|
$ 565,665 |
|
Equity in earnings (losses) of affiliates |
||||||
|
Oilseeds & Corn Processing |
$ 22,333 |
$ 21,699 |
$ 20,044 |
|||
|
Agricultural Services |
12,360 |
3,585 |
(1,070) |
|||
|
Other |
70,216 |
62,922 |
(23,247) |
|||
|
Total |
|
$ 104,909 |
|
$ 88,206 |
|
$ (4,273) |
|
Operating profit |
||||||
|
Oilseeds & Corn Processing |
$ 502,327 |
$ 354,657 |
$ 301,219 |
|||
|
Agricultural Services |
119,548 |
129,149 |
109,943 |
|||
|
Other |
|
281,524 |
|
272,918 |
|
142,280 |
|
Total operating profit |
903,399 |
756,724 |
553,442 |
|||
|
Corporate |
(381,500) |
(403,487) |
(133,609) |
|||
|
Income before income taxes and extraordinary loss |
|
$ 521,899 |
|
$ 353,237 |
|
$ 419,833 |
|
Investments in and advances to affiliates |
||||||
|
Oilseeds & Corn Processing |
$ 397,269 |
$ 351,329 |
$ 347,636 |
|||
|
Agricultural Services |
263,724 |
269,818 |
194,271 |
|||
|
Other |
1,391,229 |
1,255,486 |
943,073 |
|||
|
Total |
|
$ 2,052,222 |
|
$ 1,876,633 |
|
$ 1,484,980 |
|
Identifiable assets |
||||||
|
Oilseeds & Corn Processing |
$ 4,659,443 |
$ 5,410,552 |
$ 5,325,015 |
|||
|
Agricultural Services |
1,967,358 |
1,810,154 |
1,564,933 |
|||
|
Other |
5,928,174 |
5,646,352 |
5,285,894 |
|||
|
Corporate |
1,784,956 |
1,604,878 |
1,854,039 |
|||
|
Total |
|
$ 14,339,931 |
|
$ 14,471,936 |
|
$ 14,029,881 |
|
Gross additions to property, plant & equipment |
||||||
|
Oilseeds & Corn Processing |
$ 202,531 |
$ 323,275 |
$ 532,804 |
|||
|
Agricultural Services |
50,375 |
52,509 |
20,931 |
|||
|
Other |
49,399 |
90,869 |
249,398 |
|||
|
Total |
|
$ 302,305 |
|
$ 466,653 |
|
$ 803,133 |
Geographic Information: The following geographic area data include net sales and other operating income attributed to the countries based on the location of the subsidiary making the sale and long-lived assets based on physical location.
|
2001 |
2000 |
1999 |
||||
|
(In millions) |
||||||
|
Net sales and other operating income: |
||||||
|
United States |
$ 13,114 |
$ 12,585 |
$ 12,573 |
|||
|
Foreign |
6,937 |
6,027 |
5,937 |
|||
|
$ 20,051 |
$ 18,612 |
$ 18,510 |
||||
|
Long-lived assets |
||||||
|
United States |
$ 3,987 |
$ 4,275 |
$ 4,525 |
|||
|
Foreign |
1,052 |
1,130 |
1,183 |
|||
|
$ 5,039 |
$ 5,405 |
$ 5,708 |
||||
Notes to Consolidated Financial Statements
Archer Daniels Midland Company
Note 12 - Litigation
The Company has been named as a defendant in a number of antitrust suits and other proceedings. These actions and proceedings generally involve claims for unspecified compensatory damages, fines, costs, expenses and unspecified relief. The Company intends to vigorously defend these actions and proceedings, and believes the ultimate disposition of these matters will not have a material adverse effect on the Company's consolidated financial condition or results of operations.
REPORT OF INDEPENDENT AUDITORS
Board of Directors and Shareholders
Archer Daniels Midland Company
Decatur, Illinois
We have audited the accompanying consolidated balance sheets of Archer Daniels Midland Company and subsidiaries as of June 30, 2001 and 2000, and the related consolidated statements of earnings, shareholders' equity and cash flows for each of the three years in the period ended June 30, 2001. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Archer Daniels Midland Company and its subsidiaries at June 30, 2001 and 2000, and the consolidated results of their operations and their cash flows for each of the three years in the period ended June 30, 2001, in conformity with accounting principles generally accepted in the United States.
St. Louis, Missouri
August 1, 2001
|
Quarterly Financial Data (Unaudited) |
|||||||||||
|
Archer Daniels Midland Company |
|||||||||||
|
Quarter |
|||||||||||
|
First |
Second |
Third |
Fourth |
Total |
|||||||
|
(In thousands, except per share amounts) |
|||||||||||
|
Fiscal 2001 |
|||||||||||
|
Net Sales |
$4,634,784 |
$4,940,999 |
$5,130,346 |
$5,345,292 |
$20,051,421 |
||||||
|
Gross Profit |
283,908 |
416,308 |
369,652 |
361,930 |
1,431,798 |
||||||
|
Net Earnings |
109,429 |
124,607 |
93,149 |
56,099 |
383,284 |
||||||
|
Per Common Share |
0.17 |
0.19 |
0.14 |
0.08 |
0.58 |
||||||
|
Fiscal 2000 |
|||||||||||
|
Net Sales |
$4,611,266 |
$4,615,421 |
$4,473,763 |
$4,911,973 |
$18,612,423 |
||||||
|
Gross Profit |
272,320 |
406,273 |
334,976 |
206,006 |
1,219,575 |
||||||
|
Net Earnings |
36,367 |
101,920 |
103,029 |
59,587 |
300,903 |
||||||
|
Per Common Share |
0.05 |
0.15 |
0.16 |
0.09 |
0.45 |
||||||
Net earnings for the three months and year ended June 30, 2000 include a charge to cost of products sold of $108 million ($72 million after tax, equal to $.11 per share) related to the abandonment of certain long-lived assets and other asset write-downs and a $60 million tax credit, equal to $.09 per share, related to a redetermination of foreign sales corporation benefits for prior years and the resolution of various other tax issues.
The Company follows a policy of recognizing sales at the time of product shipment. Effective July 1, 2000, the Company adopted Emerging Issues Task Force Issue 99-19, "Reporting Revenue Gross as a Principal Versus Net as an Agent". The adoption of this issue results in the Company reporting the total sales value of grain merchandised, in lieu of net margins from grain merchandised, in the "Net sales and other operating income" category. The "Gross profit" category is unchanged as costs related to the grain merchandised are now reported in the "Cost of products sold" category. Prior year amounts have been reclassified to conform to this change.
Common Stock Market Prices and Dividends
Archer Daniels Midland Company
The Company's common stock is listed and traded on the New York Stock Exchange, Chicago Stock Exchange, Frankfurt Stock Exchange, and the Swiss Exchange. The following table sets forth, for the periods indicated, the high and low market prices of the common stock and common stock cash dividends.
|
Cash |
|||||||||||||||
|
Market Price |
Dividends |
||||||||||||||
|
High |
Low |
Per Share |
|||||||||||||
|
Fiscal 2001--Quarter Ended |
|||||||||||||||
|
June 30 |
$ |
13. |
52 |
$ |
10. |
24 |
$ |
0.048 |
|||||||
|
March 31 |
15. |
23 |
11. |
95 |
0.048 |
||||||||||
|
December 31 |
14. |
47 |
8. |
22 |
0.048 |
||||||||||
|
September 30 |
9. |
70 |
7. |
80 |
0.045 |
||||||||||
|
Fiscal 2000--Quarter Ended |
|||||||||||||||
|
June 30 |
$ |
11. |
33 |
$ |
8. |
62 |
$ |
0.045 |
|||||||
|
March 31 |
12. |
19 |
7. |
99 |
0.045 |
||||||||||
|
December 31 |
12. |
87 |
10. |
37 |
0.045 |
||||||||||
|
September 30 |
13. |
29 |
10. |
71 |
0.043 |
||||||||||
The number of shareholders of the Company's common stock at June 30, 2001 was 27,918. The Company expects to continue its policy of paying regular cash dividends, although there is no assurance as to future dividends because they are dependent on future earnings, capital requirements and financial condition.
|
TEN YEAR SUMMARY |
||||||||
|
Archer Daniels Midland Company |
||||||||
|
Operating, Financial and Other Data (Dollars in thousands, except per share data) |
||||||||
|
2001 |
2000 |
1999 |
1998 |
|||||
|
Operating |
||||||||
|
Net sales and other operating income |
$20,051,421 |
$18,612,423 |
$18,509,903 |
$19,832,594 |
||||
|
Depreciation and amortization |
572,390 |
604,229 |
584,965 |
526,813 |
||||
|
Net earnings |
383,284 |
300,903 |
265,964 |
403,609 |
||||
|
Per common share |
0.58 |
0.45 |
0.39 |
0.59 |
||||
|
EBITDA |
1,492,420 |
1,420,816 |
1,307,429 |
1,430,045 |
||||
|
Cash dividends |
125,053 |
120,001 |
117,089 |
111,551 |
||||
|
Per common share |
0.19 |
0.18 |
0.17 |
0.16 |
||||
|
Financial |
||||||||
|
Working capital |
$2,283,320 |
$1,829,422 |
$1,949,323 |
$1,734,411 |
||||
|
Per common share |
3.45 |
2.76 |
2.89 |
2.50 |
||||
|
Current ratio |
1.6 |
1.4 |
1.5 |
1.5 |
||||
|
Inventories |
2,631,885 |
2,822,712 |
2,732,694 |
2,562,650 |
||||
|
Net property, plant and equipment |
4,920,425 |
5,277,081 |
5,567,161 |
5,322,704 |
||||
|
Gross additions to property, plant and equipment |
318,168 |
475,396 |
825,676 |
1,228,553 |
||||
|
Total assets |
14,339,931 |
14,471,936 |
14,029,881 |
13,833,534 |
||||
|
Long-term debt |
3,351,067 |
3,277,218 |
3,191,883 |
2,847,130 |
||||
|
Shareholders' equity |
6,331,683 |
6,110,243 |
6,240,640 |
6,504,912 |
||||
|
Per common share |
9.56 |
9.20 |
9.24 |
9.38 |
||||
|
Other |
||||||||
|
Weighted average shares outstanding (000's) |
664,507 |
669,279 |
685,328 |
686,047 |
||||
|
Number of shareholders |
27,918 |
29,911 |
31,764 |
32,539 |
||||
|
Number of employees |
22,834 |
22,753 |
23,603 |
23,132 |
||||
EBITDA equals earnings before interest, taxes, depreciation and amortization.
Share and per share data have been adjusted for a three-for-two stock split in December 1994 and annual 5% stock dividends through September 2001.
The Company follows a policy of recognizing sales at the time of product shipment. Effective July 1, 2000, the Company adopted Emerging Issues Task Force Issue 99-19, "Reporting Revenue Gross as a Principal Versus Net as an Agent". The adoption of this issue results in the Company reporting the total sales value of grain merchandised, in lieu of net margins from grain merchandised, in the "Net sales and other operating income" category. The "Gross profit" category is unchanged as costs related to the grain merchandised are now reported in the "Cost of products sold" category. Prior year amounts have been reclassified to conform to this change.
Net earnings for 1999 include an extraordinary charge of $15 million, or $.02 per share, from the repurchase of debt.
Net earnings for 1993 include a net credit of $68 million, or $.09 per share, and a charge of $35 million, or $.05 per share, for the cumulative effects of changes in accounting for income taxes and postretirement benefits, respectively.
|
1997 |
1996 |
1995 |
1994 |
1993 |
1992 |
|||||
|
$18,104,827 |
$17,981,264 |
$15,576,471 |
$13,863,065 |
$11,883,198 |
$11,139,678 |
|||||
|
446,412 |
393,605 |
384,872 |
354,463 |
328,549 |
293,729 |
|||||
|
377,309 |
695,912 |
795,915 |
484,069 |
567,527 |
503,757 |
|||||
|
0.55 |
0.99 |
1.10 |
0.66 |
0.75 |
0.66 |
|||||
|
1,288,031 |
1,618,107 |
1,737,281 |
1,266,195 |
1,258,521 |
1,168,715 |
|||||
|
106,990 |
90,860 |
46,825 |
32,586 |
32,266 |
30,789 |
|||||
|
0.15 |
0.13 |
0.06 |
0.04 |
0.04 |
0.04 |
|||||
|
$2,035,580 |
$2,751,132 |
$2,540,260 |
$2,783,817 |
$2,961,503 |
$2,276,564 |
|||||
|
3.00 |
3.95 |
3.56 |
3.84 |
3.90 |
3.00 |
|||||
|
1.9 |
2.7 |
3.2 |
3.5 |
4.1 |
3.4 |
|||||
|
2,094,092 |
1,790,636 |
1,473,896 |
1,422,147 |
1,131,787 |
1,025,030 |
|||||
|
4,708,595 |
4,114,301 |
3,762,281 |
3,538,575 |
3,214,834 |
3,060,096 |
|||||
|
1,127,360 |
801,426 |
657,915 |
682,485 |
572,022 |
614,844 |
|||||
|
11,354,367 |
10,449,869 |
9,756,887 |
8,746,853 |
8,404,111 |
7,524,530 |
|||||
|
2,344,949 |
2,002,979 |
2,070,095 |
2,021,417 |
2,039,143 |
1,562,491 |
|||||
|
6,050,129 |
6,144,812 |
5,854,165 |
5,045,421 |
4,883,251 |
4,492,353 |
|||||
|
8.92 |
8.82 |
8.20 |
6.96 |
6.44 |
5.91 |
|||||
|
690,352 |
702,012 |
724,610 |
732,108 |
759,653 |
761,686 |
|||||
|
33,834 |
35,431 |
34,385 |
33,940 |
33,654 |
32,277 |
|||||
|
17,160 |
14,811 |
14,833 |
16,013 |
14,168 |
13,524 |
|||||
EXHIBIT 21--SUBSIDIARIES OF THE REGISTRANT
ARCHER DANIELS MIDLAND COMPANY
June 30, 2001
Following is a list of the Registrant's subsidiaries showing the percentage of voting securities owned:
|
|
Organized Under Laws of |
Ownership |
|
ADM Agri-Industries Ltd. (A) |
Canada |
100% |
|
ADM Europe BV (B) |
Netherlands |
100 |
|
ADM Europoort BV (C) |
Netherlands |
100 |
|
ADM/Growmark River Systems, Inc. (D) |
Delaware |
100 |
|
ADM Beteiligungs GmbH (E) |
Germany |
100 |
|
ADM Do Brazil Ltda (F) |
Brazil |
100 |
|
ADM International Ltd. (G) |
England |
100 |
|
ADM Investments Ltd. (H) |
Cayman Islands |
100 |
|
ADM Investor Services, Inc. (I) |
Delaware |
100 |
|
ADM Milling Co. (J) |
Minnesota |
100 |
|
ADM Transportation Co. |
Delaware |
100 |
|
Agri Sales, Inc |
Illinois |
100 |
|
American River Transportation Co. |
Delaware |
100 |
|
Ardanco, Inc. |
Guam |
100 |
|
Collingwood Grain, Inc. |
Kansas |
100 |
|
Hickory Point Bank & Trust Co. (K) |
Illinois |
100 |
|
Jamaica Flour Mills Limited (L) |
Jamaica |
100 |
|
Midland Stars, Inc. |
Delaware |
100 |
|
Oelmuhle Hamburg AG (M) |
Germany |
95 |
|
Tabor Grain Co. |
Nevada |
100 |
(A) ADM Agri-Industries Ltd. has three subsidiary companies whose names have been omitted because, considered in the aggregate as a single subsidiary, they would not constitute a significant subsidiary.
(B) ADM Europe BV has fourteen subsidiary companies whose names have been omitted because, considered in the aggregate as a single subsidiary, they would not constitute a significant subsidiary.
(C) ADM Europoort BV has eight subsidiary companies whose names have been omitted because, considered in the aggregate as a single subsidiary, they would not constitute a significant subsidiary.
(D) ADM/Growmark River Systems, Inc. has four subsidiary companies whose names have been omitted because, considered in the aggregate as a single subsidiary, they would not constitute a significant subsidiary.
(E) ADM Beteiligungs GmbH has six subsidiary companies whose names have been omitted because, considered in the aggregate as a single subsidiary, they would not constitute a significant subsidiary.
(F) ADM Do Brazil Ltda has five subsidiary companies whose names have been omitted because, considered in the aggregate as a single subsidiary, they would not constitute a significant subsidiary.
(G) ADM International Ltd. has twenty-nine subsidiary companies whose names have been omitted because, considered in the aggregate as a single subsidiary, they would not constitute a significant subsidiary.
(H) ADM Investments Ltd. has eight subsidiary companies whose names have been omitted because, considered in the aggregate as a single subsidiary, they would not constitute a significant subsidiary.
(I) ADM Investor Services, Inc. has one subsidiary company whose name has been omitted because, considered in the aggregate as a single subsidiary, it does not constitute a significant subsidiary.
(J) ADM Milling Co. has seven subsidiary companies whose names have been omitted because, considered in the aggregate as a single subsidiary, they would not constitute a significant subsidiary.
(K) Hickory Point Bank & Trust Co. has one subsidiary company whose name has been omitted because, considered in the aggregate as a single subsidiary, it does not constitute a significant subsidiary.
(L) Jamaica Flour Mills Limited has eight subsidiary companies whose names have been omitted because, considered in the aggregate as a single subsidiary, they would not constitute a significant subsidiary.
(M) Oelmuhle Hamburg AG has twelve subsidiaries whose names have been omitted because, considered in the aggregate as a single subsidiary, they would not constitute a significant subsidiary.
The names of forty-one domestic subsidiaries and forty-five international subsidiaries have been omitted because, considered in the aggregate as a single subsidiary, they would not constitute a significant subsidiary.
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in this Annual Report (Form 10-K) of Archer Daniels Midland Company of our report dated August 1, 2001 included in the 2001 Annual Report to Shareholders of Archer Daniels Midland Company.
Our audits also included the financial statement schedule of Archer Daniels Midland Company listed in Item 14(a). This schedule is the responsibility of the Company's management. Our responsibility is to express an opinion based on our audits. In our opinion, the financial statement schedule referred to above, when considered in relation to the basic financial statements taken as a whole, presents fairly in all material respects the information set forth therein.
We also consent to the incorporation by reference in the following Registration Statements of our report dated August 1, 2001, with respect to the consolidated financial statements of Archer Daniels Midland Company incorporated herein by reference and our report in the preceding paragraph with respect to the financial statement schedule included in this Annual Report (Form 10-K) for the year ended June 30, 2001.
Registration Statement No. 33-49409 on Form S-8 dated March 15, 1993 relating to the Archer Daniels Midland 1991 Incentive Stock Option Plan and Archer Daniels Midland Company Savings and Investment Plan.
Registration Statement No. 33-55301 on Form S-3 dated August 31, 1994 as amended by Amendment No. 1 dated October 7, 1994 (definitive Prospectus dated October 11, 1994) relating to secondary offering of the Common Stock of Archer Daniels Midland Company.
Registration Statement No. 33-56223 on Form S-3 dated October 28, 1994 as amended by Amendment No. 1 dated December 27, 1994 (definitive Prospectus dated December 30, 1994) relating to secondary offering of the Common Stock of Archer Daniels Midland Company.
Registration Statement No. 333-13233 on Form S-3 dated October 1, 1996 as amended by Amendment No. 1 dated November 8, 1996, Amendment No. 2 dated March 20, 1997 and Amendment No. 3 dated March 31, 1997 (definitive Prospectus dated April 1, 1997) relating to secondary offering of the Common Stock of Archer Daniels Midland Company.
Registration Statement No. 333-31623 on Form S-3 dated July 18, 1997 as amended by Amendment No. 1 dated July 29, 1997, (definitive Prospectus dated August 5, 1997) relating to secondary offering of the Common Stock of Archer Daniels Midland Company.
Registration Statement No. 333-48903 on Form S-3 dated March 30, 1998 relating to Debt Securities and Warrants to purchase Debt Securities of Archer Daniels Midland Company.
Registration Statement No. 333-51381 on Form S-8 dated April 29, 1998 relating to the Archer Daniels Midland Company 1996 Stock Option Plan.
Registration Statement No. 333-68339 on Form S-3 dated December 3, 1998 as amended by Amendment No. 1 dated December 10, 1998 relating to secondary offering of the common stock of Archer Daniels Midland Company.
Registration Statement No. 333-75073 on Form S-8 dated March 26, 1999 relating to the ADM Employee Stock Ownership Plan for Salaried Employees and the ADM Employee Stock Ownership Plan for Hourly Employees.
Registration Statement No. 333-37690 on Form S-8 dated May 23, 2000 relating to the Archer Daniels Midland Company Incentive Compensation Plan.
Registration Statement No. 333-37694 on Form S-8 dated May 23, 2000 relating to the ADM Employee Stock Ownership Plan for Salaried Employees and the ADM Employee Stock Ownership Plan for Hourly Employees.
Registration Statement No. 333-42612 on Form S-8 dated July 31, 2000 as amended by Post-Effective No. 1 dated August 8, 2000, relating to the ADM 401(k) Plan for Salaried Employees and the ADM 401(k) Plan for Hourly Employees.
Registration Statement No. 333-64524 on Form S-3 dated July 3, 2001 relating to secondary offering of the Common Stock of Archer-Daniels-Midland Company.
Registration Statement No. 333-67962 on Form S-3 dated August 20, 2001 relating to the ADM Deferred Compensation Plan for Selected Management Employees.
St. Louis, Missouri
September 27, 2001
EXHIBIT 24
ARCHER-DANIELS-MIDLAND COMPANY
Power of Attorney
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director of ARCHER-DANIELS-MIDLAND COMPANY, a Delaware corporation, does hereby make, constitute and appoint D. J. SCHMALZ, S. R. MILLS and D. J. SMITH, and each or any one of them, the undersigned's true and lawful attorneys-in-fact, with power of substitution, for the undersigned and in the undersigned's name, place and stead, to sign and affix the undersigned's name as a director of said Company to the Form 10-K for the fiscal year ended June 30, 2001, and all amendments thereto, to be filed by said Company with the Securities and Exchange Commission, Washington, D.C., and to file the same, with all exhibits thereto and other supporting documents, with said Commission, granting unto said attorneys-in-fact, and each of them, full power and authority to do and perform any and all acts necessary or incidental to the performance and execution of the powers therein expressly granted.
IN WITNESS WHEREOF, the undersigned has hereunto set the undersigned's hand this 24th day of September, 2001.
/s/D. O. ANDREAS
D. O. ANDREAS
ARCHER-DANIELS-MIDLAND COMPANY
Power of Attorney of Director
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, the Chief Executive Officer (Principal Executive Officer) and Chairman of the Board of Directors of ARCHER-DANIELS-MIDLAND COMPANY, a Delaware corporation, does hereby make, constitute and appoint D. J. SCHMALZ, S. R. MILLS and D. J. SMITH, and each or any one of them, the undersigned's true and lawful attorneys-in-fact, with power of substitution, for the undersigned and in the undersigned's name, place and stead, to sign and affix the undersigned's name as the Chief Executive Officer and Chairman of the Board of Directors of said Company to the Form 10-K for the fiscal year ended June 30, 2001, and all amendments thereto, to be filed by said Company with the Securities and Exchange Commission, Washington, D.C., and to file the same, with all exhibits thereto and other supporting documents, with said Commission, granting unto said attorneys-in-fact, and each of them, full power and authority to do and perform any and all acts necessary or incidental to the performance and execution of the powers therein expressly granted.
IN WITNESS WHEREOF, the undersigned has hereunto set the undersigned's hand this 24th day of September, 2001.
/s/G. ALLEN ANDREAS
G. ALLEN ANDREAS
ARCHER-DANIELS-MIDLAND COMPANY
Power of Attorney of Director
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director of ARCHER-DANIELS-MIDLAND COMPANY, a Delaware corporation, does hereby make, constitute and appoint D. J. SCHMALZ, S. R. MILLS and D. J. SMITH, and each or any one of them, the undersigned's true and lawful attorneys-in-fact, with power of substitution, for the undersigned and in the undersigned's name, place and stead, to sign and affix the undersigned's name as a director of said Company to the Form 10-K for the fiscal year ended June 30, 2001, and all amendments thereto, to be filed by said Company with the Securities and Exchange Commission, Washington, D.C., and to file the same, with all exhibits thereto and other supporting documents, with said Commission, granting unto said attorneys-in-fact, and each of them, full power and authority to do and perform any and all acts necessary or incidental to the performance and execution of the powers therein expressly granted.
IN WITNESS WHEREOF, the undersigned has hereunto set the undersigned's hand this 25th day of September, 2001.
/s/J. R. BLOCK
J. R. BLOCK
ARCHER-DANIELS-MIDLAND COMPANY
Power of Attorney of Director
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director of ARCHER-DANIELS-MIDLAND COMPANY, a Delaware corporation, does hereby make, constitute and appoint D. J. SCHMALZ, S. R. MILLS and D. J. SMITH, and each or any one of them, the undersigned's true and lawful attorneys-in-fact, with power of substitution, for the undersigned and in the undersigned's name, place and stead, to sign and affix the undersigned's name as a director of said Company to the Form 10-K for the fiscal year ended June 30, 2001, and all amendments thereto, to be filed by said Company with the Securities and Exchange Commission, Washington, D.C., and to file the same, with all exhibits thereto and other supporting documents, with said Commission, granting unto said attorneys-in-fact, and each of them, full power and authority to do and perform any and all acts necessary or incidental to the performance and execution of the powers therein expressly granted.
IN WITNESS WHEREOF, the undersigned has hereunto set the undersigned's hand this 25th day of September, 2001.
/s/RICHARD BURT
RICHARD BURT
ARCHER-DANIELS-MIDLAND COMPANY
Power of Attorney of Director
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director of ARCHER-DANIELS-MIDLAND COMPANY, a Delaware corporation, does hereby make, constitute and appoint D. J. SCHMALZ, S. R. MILLS and D. J. SMITH, and each or any one of them, the undersigned's true and lawful attorneys-in-fact, with power of substitution, for the undersigned and in the undersigned's name, place and stead, to sign and affix the undersigned's name as a director of said Company to the Form 10-K for the fiscal year ended June 30, 2001, and all amendments thereto, to be filed by said Company with the Securities and Exchange Commission, Washington, D.C., and to file the same, with all exhibits thereto and other supporting documents, with said Commission, granting unto said attorneys-in-fact, and each of them, full power and authority to do and perform any and all acts necessary or incidental to the performance and execution of the powers therein expressly granted.
IN WITNESS WHEREOF, the undersigned has hereunto set the undersigned's hand this 25th day of September, 2001.
/s/M. H. CARTER
M. H. CARTER
ARCHER-DANIELS-MIDLAND COMPANY
Power of Attorney of Director
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director of ARCHER-DANIELS-MIDLAND COMPANY, a Delaware corporation, does hereby make, constitute and appoint D. J. SCHMALZ, S. R. MILLS and D. J. SMITH, and each or any one of them, the undersigned's true and lawful attorneys-in-fact, with power of substitution, for the undersigned and in the undersigned's name, place and stead, to sign and affix the undersigned's name as a director of said Company to the Form 10-K for the fiscal year ended June 30, 2001, and all amendments thereto, to be filed by said Company with the Securities and Exchange Commission, Washington, D.C., and to file the same, with all exhibits thereto and other supporting documents, with said Commission, granting unto said attorneys-in-fact, and each of them, full power and authority to do and perform any and all acts necessary or incidental to the performance and execution of the powers therein expressly granted.
IN WITNESS WHEREOF, the undersigned has hereunto set the undersigned's hand this 26th day of September, 2001.
/s/H. de BOON
H. de BOON
ARCHER-DANIELS-MIDLAND COMPANY
Power of Attorney of Director
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director of ARCHER-DANIELS-MIDLAND COMPANY, a Delaware corporation, does hereby make, constitute and appoint D. J. SCHMALZ, S. R. MILLS and D. J. SMITH, and each or any one of them, the undersigned's true and lawful attorneys-in-fact, with power of substitution, for the undersigned and in the undersigned's name, place and stead, to sign and affix the undersigned's name as a director of said Company to the Form 10-K for the fiscal year ended June 30, 2001, and all amendments thereto, to be filed by said Company with the Securities and Exchange Commission, Washington, D.C., and to file the same, with all exhibits thereto and other supporting documents, with said Commission, granting unto said attorneys-in-fact, and each of them, full power and authority to do and perform any and all acts necessary or incidental to the performance and execution of the powers therein expressly granted.
IN WITNESS WHEREOF, the undersigned has hereunto set the undersigned's hand this 23rd day of September, 2001.
/s/F. ROSS JOHNSON
F. ROSS JOHNSON
ARCHER-DANIELS-MIDLAND COMPANY
Power of Attorney of Director
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director of ARCHER-DANIELS-MIDLAND COMPANY, a Delaware corporation, does hereby make, constitute and appoint D. J. SCHMALZ, S. R. MILLS and D. J. SMITH, and each or any one of them, the undersigned's true and lawful attorneys-in-fact, with power of substitution, for the undersigned and in the undersigned's name, place and stead, to sign and affix the undersigned's name as a director of said Company to the Form 10-K for the fiscal year ended June 30, 2001, and all amendments thereto, to be filed by said Company with the Securities and Exchange Commission, Washington, D.C., and to file the same, with all exhibits thereto and other supporting documents, with said Commission, granting unto said attorneys-in-fact, and each of them, full power and authority to do and perform any and all acts necessary or incidental to the performance and execution of the powers therein expressly granted.
IN WITNESS WHEREOF, the undersigned has hereunto set the undersigned's hand this 25th day of September, 2001.
/s/DAVID J. MIMRAN
DAVID J. MIMRAN
ARCHER-DANIELS-MIDLAND COMPANY
Power of Attorney of Director
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director of ARCHER-DANIELS-MIDLAND COMPANY, a Delaware corporation, does hereby make, constitute and appoint D. J. SCHMALZ, S. R. MILLS and D. J. SMITH, and each or any one of them, the undersigned's true and lawful attorneys-in-fact, with power of substitution, for the undersigned and in the undersigned's name, place and stead, to sign and affix the undersigned's name as a director of said Company to the Form 10-K for the fiscal year ended June 30, 2001, and all amendments thereto, to be filed by said Company with the Securities and Exchange Commission, Washington, D.C., and to file the same, with all exhibits thereto and other supporting documents, with said Commission, granting unto said attorneys-in-fact, and each of them, full power and authority to do and perform any and all acts necessary or incidental to the performance and execution of the powers therein expressly granted.
IN WITNESS WHEREOF, the undersigned has hereunto set the undersigned's hand this 25th day of September, 2001.
/s/M. BRIAN MULRONEY
M. BRIAN MULRONEY
ARCHER-DANIELS-MIDLAND COMPANY
Power of Attorney of Director
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director of ARCHER-DANIELS-MIDLAND COMPANY, a Delaware corporation, does hereby make, constitute and appoint D. J. SCHMALZ, S. R. MILLS and D. J. SMITH, and each or any one of them, the undersigned's true and lawful attorneys-in-fact, with power of substitution, for the undersigned and in the undersigned's name, place and stead, to sign and affix the undersigned's name as a director of said Company to the Form 10-K for the fiscal year ended June 30, 2001, and all amendments thereto, to be filed by said Company with the Securities and Exchange Commission, Washington, D.C., and to file the same, with all exhibits thereto and other supporting documents, with said Commission, granting unto said attorneys-in-fact, and each of them, full power and authority to do and perform any and all acts necessary or incidental to the performance and execution of the powers therein expressly granted.
IN WITNESS WHEREOF, the undersigned has hereunto set the undersigned's hand this 25th day of September, 2001.
/s/R. S. STRAUSS
R. S. STRAUSS
ARCHER-DANIELS-MIDLAND COMPANY
Power of Attorney of Director
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director of ARCHER-DANIELS-MIDLAND COMPANY, a Delaware corporation, does hereby make, constitute and appoint D. J. SCHMALZ, S. R. MILLS and D. J. SMITH, and each or any one of them, the undersigned's true and lawful attorneys-in-fact, with power of substitution, for the undersigned and in the undersigned's name, place and stead, to sign and affix the undersigned's name as a director of said Company to the Form 10-K for the fiscal year ended June 30, 2001, and all amendments thereto, to be filed by said Company with the Securities and Exchange Commission, Washington, D.C., and to file the same, with all exhibits thereto and other supporting documents, with said Commission, granting unto said attorneys-in-fact, and each of them, full power and authority to do and perform any and all acts necessary or incidental to the performance and execution of the powers therein expressly granted.
IN WITNESS WHEREOF, the undersigned has hereunto set the undersigned's hand this 25th day of September, 2001.
/s/J. K. VANIER
J. K. VANIER
ARCHER-DANIELS-MIDLAND COMPANY
Power of Attorney of Director
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director of ARCHER-DANIELS-MIDLAND COMPANY, a Delaware corporation, does hereby make, constitute and appoint D. J. SCHMALZ, S. R. MILLS and D. J. SMITH, and each or any one of them, the undersigned's true and lawful attorneys-in-fact, with power of substitution, for the undersigned and in the undersigned's name, place and stead, to sign and affix the undersigned's name as a director of said Company to the Form 10-K for the fiscal year ended June 30, 2001, and all amendments thereto, to be filed by said Company with the Securities and Exchange Commission, Washington, D.C., and to file the same, with all exhibits thereto and other supporting documents, with said Commission, granting unto said attorneys-in-fact, and each of them, full power and authority to do and perform any and all acts necessary or incidental to the performance and execution of the powers therein expressly granted.
IN WITNESS WHEREOF, the undersigned has hereunto set the undersigned's hand this 25th day of September, 2001.
/s/O. G. WEBB
O. G. WEBB
ARCHER-DANIELS-MIDLAND COMPANY
Power of Attorney of Director
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director of ARCHER-DANIELS-MIDLAND COMPANY, a Delaware corporation, does hereby make, constitute and appoint D. J. SCHMALZ, S. R. MILLS and D. J. SMITH, and each or any one of them, the undersigned's true and lawful attorneys-in-fact, with power of substitution, for the undersigned and in the undersigned's name, place and stead, to sign and affix the undersigned's name as a director of said Company to the Form 10-K for the fiscal year ended June 30, 2001, and all amendments thereto, to be filed by said Company with the Securities and Exchange Commission, Washington, D.C., and to file the same, with all exhibits thereto and other supporting documents, with said Commission, granting unto said attorneys-in-fact, and each of them, full power and authority to do and perform any and all acts necessary or incidental to the performance and execution of the powers therein expressly granted.
IN WITNESS WHEREOF, the undersigned has hereunto set the undersigned's hand this day of September, 2001.
/s/ANDREW YOUNG
ANDREW YOUNG
T(Q19464V*TH#L4`^-:TM97,-&5W43"\$^]0,QM!%DJ:X^N01B4@)H^2[_
M]!./#(J\STU/$BTY(O'8"Y:]D'FLG5PAVY1:U'V%*0FQWX$NB*$L.26.@<\5
MBT?W.+J-IHA,TB,]$I<0R*+>[\NN